Venezuela on a slippery economic path.

The oil giant of Latin America is slipping into a recession, even as Germany and France are just about coming out of it. Venezuela risks slipping up on economic growth on the same path as it zoomed into the growth zone until a few years ago, that is oil.

The slump in oil prices, the mainstay of the Venezuelan economy, is the single most important reason for the economic woes of the country. This fall in prices begot reactions of the negative kind from the Government side, as it often happens, with even more negative effects.

In order to deal with the oil crisis, the Venezuelan Government has introduced severe controls on prices and foreign exchange to reduce its outflow. This has impacted on the industries that depend on imports, which nevertheless contribute to the gross domestic product, and more importantly, proved jobs, that are getter scarce by the day.

Manufacturing has fallen sharply in the last two quarters, as also retail sales. Food shortage, long a constant companion of the Venezuelan system, is affecting the welfare of the people in many ways. Housing is another area where the Government does not seem to have done creditably. On the other hand, increase in Government participation in the economic development process, beyond the normal level, has had its own effect in terms of deficits, and efficiency at different levels of operation.

Most of the economic sectors have recorded a fall led by oil, the manufacturing sector, retails sale, with the fall in consumption adding to the basket of worries of the Government. Deficit financing has become the norm in recent months, and likely to add to future problems in this regard.

Even though Venezuela has spent its proceeds of oil wealth in creating infrastructure, the sheer fall in oil prices has had a cascading effect on its economy, now poised to enter a recession.