The WallStreet Journal

Chávez Discounts Accuracy of GDP
The Wall Street Journal

President Hugo Chávez wasn’t pleased with data released this week that showed the Venezuelan economy tumbling into a recession. So the populist leader came up with a solution: Forget traditional measures of economic growth, and find a new, « Socialist-friendly » gauge.

« We simply can’t permit that they continue calculating GDP with the old capitalist method, » President Chávez said in a televised speech before members of his Socialist party on Wednesday night. « It’s harmful. »

Mr. Chávez’s comments came shortly after data showed Venezuela’s gross domestic product — a broad measure of annual economic output — fell 4.5% in the third quarter from the year-earlier period. It was the second consecutive quarterly decline, and observers have questioned how Mr. Chávez will be able to generate growth without high oil prices.

Now that oil prices are less high, economists say Mr. Chávez’s stepped-up government spending and nationalizations of various industries are taking their toll, causing a combination of high inflation from the spending and weak growth from a lack of investment by local businesses. Economists forecast continued weak growth for Venezuela next year, worrisome for a leader who has relied on spending to stay in power for more than a decade.

Some analysts worry Mr. Chávez might follow in the footsteps of leaders in Argentina, where the government changed the way it measured inflation in a move that was widely seen as an attempt to camouflage rising prices and that has added to investor distrust of Buenos Aires.