Energy Shortage Dims Outlook In Colombia And Venezuela

Acute energy shortages, historically a warning sign for unpopular Latin American leaders, are threatening to undermine the government of Colombia and plunge neighbouring Venezuela deeper in to crisis, the Financial Times reported. Free-market Colombia, until recently a regional star, and the crisis-ridden, socialist Venezuela have both been forced to introduce energy-saving measures amid a combination of factors aggravated by a lack of rain due to the El Niño weather phenomenon. Venezuela’s government even extended the Easter holiday from three to five days to save electricity. The issues in Colombia and Venezuela have awkward historical echoes in Latin America, where rolling blackouts have preceded the fall of governments. Bancolombia says power outages could cut 0.3 percentage points off the country’s expected economic growth of 2.6 per cent this year. This is bad news for Colombia which last year grew at its slowest pace in six years, at 3.1 per cent, as the price of oil, its main export, dropped. More politically explosive though, power outages could cause prices to rise a further 0.24 percentage points as Colombians grapple with accelerating inflation of 7.59 per cent. Read more. (Subscription required.)