CARACAS (AFP) - Venezuelas crackdown on hard currency sales outside official channels threatens to deepen the South American nations economic woes, some analysts and business leaders in the country say. The government of President Hugo Chavez in the past week stepped up its efforts to curb the parallel market for US dollars by shutting down currency dealers, making arrests and suspending some foreign currency transactions. Chavez justified the move Thursday by citing an exchange rate shock that threatened the country with an economic heart attack. But some said the actions could have negative consequences for an economy that contracted 3.3 percent in 2009 and is hurting because of its dependence on oil exports. The economy will suffer a severe shock, and the contraction is set to worsen due to lack of foreign exchange, economist Jose Guerra told AFP. The government is attacking the consequences and not the causes of the problem. The government had already had an official currency exchange rate but Venezuelans were able to get around that through the sale of stocks and bonds, until the latest measures took effect this week. The official exchange rate had been set at 2.6 bolivars per dollar for priority imports, and 4.3 bolivars per dollars for other deals. The new law gave the central bank full control of currency exchange rates. Earlier this week it announced currency exchange bands in a bid to shore up its sinking money against the dollar and tamp down runaway inflation. This amounts to a de facto devaluation, said Guerra. While Chavez sharply devalued the bolivar in January, the parallel rate continued to slide and is now at a level far beyond the official figure. Economists estimate that the parallel dollar market was being used for 40 to 45 percent of imports. But fears about the economy and currency have led to inflation surging to more than 30 percent in the last 12 months. Carlos Larrazabal, president of the Venezuelan Confederation of Industries (Conindustria), said the latest moves have led to a great climate of uncertainty which is paralyzing the private sector. Larrazabal said inventories are low and this could lead to shortages of some goods. Companies are reluctant to use an illegal market to buy dollars, amid a threat of fines or imprisonment, as provided by the new law. If employers do not obtain the necessary dollars, they will be forced to import less and that will bring shortages, said Pedro Palma of the countrys National Academy of Economic Sciences. Chavez remained firm despite the predictions of more woes. People are already saying that there are no products, Chavez said Thursday. I am not going to stop anything.