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Venezuela Economy Grows 5.1 Pct.

December 26, 1997

CARACAS, Venezuela (AP) _ Venezuela’s economy grew 5.1 percent this year, fueled by an expansion of the oil sector and increases in consumer spending and foreign investment, the government said.

The robust growth followed the contraction of the economy last year after President Rafael Caldera imposed austerity measures to foster free markets.

Much of the 1997 expansion was due to an 8.8 percent gain in the oil sector, Central Bank President Antonio Casas Gonzalez said in a statement published Friday in local newspapers.

Venezuela, the main foreign supplier of oil to the United States, increased its daily oil exports by some 300,000 barrels to 3.065 million barrels a day in 1997, the Central Bank said. That put it well over its quota of 2.583 million barrels a day in the Organization of Petroleum Exporting Countries.

For the first time in two decades, the government has decided to allow foreign oil companies such as Exxon, Shell and Mobil to invest in Venezuela’s state-controlled oil sector.

Preliminary figures show that direct foreign investment reached $4.346 billion this year, mostly directed toward the oil sector and the privatization of state-run banks, Casas said. Direct foreign investment in 1996 was $1.575 billion.

A sharp rebound in consumer spending this year was helped by an increase in the minimum wage, higher wages for public sector employees and rising bank credit, Casas said.

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