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Venezuelan Economy Shrinks 2.9 Percent

Venezuelan Bolivars

Venezuelan Bolivars

Venezuela's economy shrank 2.9 percent this year, with the oil sector helping pull the country into recession.

Central bank president Nelson Merentes said in his end-of-year report that a 6.1 percent decline in the oil industry hurt the economy.

The sector has earned less due to lower prices and production cuts by the Organization of Petroleum Exporting Countries, of which Venezuela is a member.

Venezuela was last in recession in 2003, when the economy shrank 8 percent due to a failed coup against President Hugo Chavez the year before and a subsequent opposition-led strike that paralyzed the oil sector.

In November, the central bank said the Venezuelan economy contracted 4.5 percent in the third quarter from the same period last year. The bank attributed the economic slippage to the effects of the global economic crisis and weakening oil prices.

President Chavez has increased his government's grip on the economy since 2006, when he forced foreign companies into joint ventures. He has nationalized major oil projects and moved to take control of industries such as electricity, cement, steel and telecommunications.

Some information for this report was provided by AP, Bloomberg and Reuters.