Venezuela has become a real economic basket case

From the BBC

Venezuela's biggest beer producer, food and drink giant Polar, is also the country's largest company still in private hands after President Hugo Chavez's nationalisation drive.

But that may not be the case for long.

Last week, Mr Chavez stepped up his attacks on Polar's billionaire owner, Lorenzo Mendoza, whom he has previously accused of pushing up food prices by hoarding products to cause artificial shortages.

For its part, Polar has called the allegations "absurd" and "senseless". . . .

Venezuelan economist Angel Alayon, of food industry body Cavidea, says that the government now controls 75% of coffee production, 42% of maize flour, 40% of rice, 25% of cooking oil, 52% of sugar and 25% of milk.

The government says it has a duty to secure food supplies and to prevent what it sees as "economic sabotage" by private companies. . . .

The country's economy contracted 5.8% in the first quarter of this year compared with a year earlier.

The International Monetary Fund predicts that its GDP will shrink by 2.6% in 2010, making it the only Latin American economy, and the world's only oil exporter, to see a contraction for this year.

Mr Chavez believes that a bigger economic role for the state is the only way to ensure the effectiveness of his price controls and stave off stagflation - the deadly combination of economic stagnation and high inflation that is currently assailing the country.

Venezuela's consumer inflation rate is currently the worst in Latin America, reaching an annual rate of 27% last year and expected to rise to 29.7% in 2010, according to the IMF. . . .