July 17, 2020 / 9:29 PM / 18 days ago

Venezuela's slight economic recovery fades due to oil price fall and pandemic, Congress says

CARACAS, July 17 (Reuters) - A slight recovery in Venezuela’s economic activity in January evaporated in February and March due to the fall in global oil prices and the coronavirus pandemic, according to a document released on Friday by the opposition-controlled congress.

Economic activity had increased 8% in January 2020 compared to December 2019, according to the body, which has monitored economic activity independently for three years due to gaps in official figures on economic performance.

But the small advance the country achieved with increased oil sales abroad and relaxed government currency controls has dissipated since February, hurt by the impact of the fall in world oil prices, U.S. sanctions, and the departure of Russia’s largest oil producer, Rosneft, from Venezuela. The Russian company was a key partner to Venezuelan state oil firm Petroleos de Venezuela (PDVSA).

At the end of the first quarter, economic activity was down 25% compared to the same period in 2019, the report said.

Venezuela’s central bank has not released economic figures for a year.

“The opportunity for relief was lost,” said lawmaker Angel Alvarado when presenting the findings. “We believe the fall will continue due to PDVSA’s destruction and the inability to sell crude abroad.”

Data provided by Venezuela to OPEC earlier this week showed crude output in June had fallen to a 77-year low, as escalating U.S. sanctions designed to oust President Nicolas Maduro choked off exports.

Production has been falling sharply since 2016 - before Washington imposed sanctions on PDVSA in January 2019 - due to underinvestment and mismanagement.

Crude exports have historically provided more than 90% of Venezuela’s hard currency, though official data has not been published recently.

The current size of the Venezuelan economy, which the congress estimates at about 65 billion dollars, is similar to that of nations such as Paraguay and Uruguay, with a quarter of its inhabitants.

Reporting by Corina Pons and Mayela Armas; Writing by Sarah Kinosian; Editing by Rosalba O'Brien

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