Economy of Venezuela

Economy of Venezuela
Plaza Venezuela in Caracas
CurrencyBolívar Digital (VES)
Calendar year
Trade organizations
WTO, OPEC, Unasur, ALBA
Statistics
PopulationIncrease 28,301,696 (2022)[1]
GDP
  • Increase $102.328 billion (nominal, 2024 est.)[2]
  • Increase $224.526 billion (PPP, 2024 est.)[2]
GDP rank
GDP growth
  • Increase 4.0% (2023f)[3]
GDP per capita
  • Increase $3,867 (nominal, 2024 est.)[2]
  • Increase $8,486 (PPP, 2024 est.)[2]
GDP per capita rank
GDP by sector
  • Positive decrease 193% (OVF estimate; annual; December 2023)[5]
  • Positive decrease 189.8% (BCV; annual; December 2023)[6]
  • Negative increase 360% (IMF estimate; annual; 2023)[2]
Population below poverty line
  • Negative increase 87.0% (2017 est.)[7]
  • 19.7% (2015 est.)[4]
39 medium (2011)[4]
Decrease 13 out of 100 points (2023, 177th rank)
Labor force
Decrease 11,063,337 (2020)[10]
Labor force by occupation
  • Communal, social and personal services: 31.4%
  • Commercial, restaurants and hotels: 23.4%
  • Manufacturing industry: 11.6%
  • Construction: 9.0%
  • Transport, storage and communications: 8.7%
  • Agriculture: 6.5%
  • Financial, insurance and real estate: 6.1%
  • (2015)[11]
UnemploymentNegative increase 35.6% (2018 est.)[2]
Main industries
Petroleum, construction materials, food processing, iron ore mining, steel, aluminum; motor vehicle assembly, real estate, tourism and ecotourism
External
ExportsIncrease $32.08 billion (2017)[12]
Export goods
Petroleum, chemicals, agricultural products and basic manufactures
Main export partners
Imports$9.1 billion (2017)[13]
Import goods
Food, clothing, cars, technological items, raw materials, machinery and equipment, transport equipment and construction material
Main import partners
FDI stock
  • Decrease $32.74 billion (31 December 2017 est.)[4]
  • Increase Abroad: $35.15 billion (31 December 2017 est.)[4]
Increase $4.277 billion (2017 est.)[4]
Positive decrease $100.3 billion (31 December 2017 est.)[4]
Public finances
Negative increase 38.9% of GDP (2017 est.)[4][note 1]
−46.1% (of GDP) (2017 est.)[4]
Revenues92.8 billion (2017 est.)[4]
Expenses189.7 billion (2017 est.)[4]
Standard & Poor's:[14]
SD (domestic)
SD (foreign)
Outlook: negative

Moody's:[15] C
Outlook: stable

Fitch:[16]
CC (domestic)
RD (foreign)
Outlook: negative
  • Decrease $8.999 billion (April 2019)[17]
  • Decrease $9.661 billion (31 December 2017 est.)[4]
All values, unless otherwise stated, are in US dollars.

The economy of Venezuela is based primarily on petroleum,[4][18] as the country holds the largest crude oil supply in the world.[19] Venezuela was historically among the wealthiest economies in South America, particularly from the 1950s to 1980s.[20] During the 21st century, under the leadership of socialist populist Hugo Chávez and his successor Nicolás Maduro, the Venezuelan economy has collapsed, prompting millions of citizens to flee Venezuela. GDP has fallen by 80 percent in less than a decade.[20][21] The economy is characterized by corruption, good shortages, unemployment, mismanagement of the oil sector, and since 2014, hyperinflation.[19][22]

Venezuela is the 25th largest producer of oil in the world and the 8th largest member of OPEC. Venezuela also manufactures and exports heavy industry products such as steel, aluminum, and cement. Other notable manufacturing includes electronics and automobiles as well as beverages and foodstuffs. Agriculture in Venezuela accounts for approximately 4.7% of GDP, 7.3% of the labor force and at least one-fourth of Venezuela's land area.[4] Venezuela exports rice, corn, fish, tropical fruit, coffee, pork and beef. Venezuela has an estimated US$14.3 trillion worth[23] of natural resources and is not self-sufficient in most areas of agriculture. Exports accounted for 16.7% of GDP and petroleum products accounted for about 95% of those exports.[24]

Since the 1920s, Venezuela has been a rentier state, offering oil as its main export.[25] From the 1950s to the early 1980s, the Venezuelan economy experienced a steady growth that attracted many immigrants, with the nation enjoying the highest standard of living in Latin America. The situation reversed when oil prices collapsed during the 1980s. Hugo Chavez became president in 1999 and implemented a form of socialism (the Bolivarian Revolution) that resulted in the collapse or nationalization of many Venezuelan businesses, and purged the state-run PDVSA oil company, replacing thousands of workers with political supporters with no technical expertise.[20] The Chavez administration also imposed stringent currency controls in 2003 in an attempt to prevent capital flight.[26] These actions resulted in a decline in oil production and exports and a series of stern currency devaluations.[27]

Price controls and expropriation of numerous farmlands and various industries are government policies along with a near-total freeze on any access to foreign currency at reasonable "official" exchange rates. These have resulted in severe shortages in Venezuela and steep price rises of all common goods, including food, water, household products, spare parts, tools and medical supplies; forcing many manufacturers to either cut production or close down, with many ultimately abandoning the country as has been the case with several technological firms and most automobile makers.[28][29]

Venezuela's economy has been in a state of total economic collapse since 2013.[30] In 2015, Venezuela had over 100% inflation—the highest in the world and the highest in the country's history at that time.[31] According to independent sources, the rate increased to 80,000% at the end of 2018[32] with Venezuela spiraling into hyperinflation[33] while the poverty rate was nearly 90 percent of the population.[34] On 14 November 2017, credit rating agencies declared that Venezuela was in default with its debt payments, with Standard & Poor's categorizing Venezuela as being in "selective default".[35][36]

The United States has been Venezuela's most important trading partner despite the strained relations between the two countries. American exports to Venezuela have included machinery, agricultural products, medical instruments and cars. Venezuela is one of the top four suppliers of foreign oil to the United States. About 500 American companies are represented in Venezuela.[37] According to the Central Bank of Venezuela, between 1998 and 2008 the government received around US$325 billion through oil production and exports in general.[17] According to the International Energy Agency (as of August 2015), the production of 2.4 million barrels per day supplied 500,000 barrels to the United States.[18] A report published by Transparencia Venezuela in 2022 estimated that illegal activities in the country made up around 21% of its GDP.[38][39][40]

  1. ^ "Population, total – Venezuela, RB". data.worldbank.org. World Bank. Retrieved 4 November 2020.
  2. ^ a b c d e f "World Economic Outlook Database, October 2023". IMF.org. International Monetary Fund. Retrieved 12 December 2023.
  3. ^ IMF (10 October 2023). "Venezuela's economic outlook". International Monetary Found. Retrieved 12 December 2023.
  4. ^ a b c d e f g h i j k l m n "The World Factbook". CIA.gov. Central Intelligence Agency. Retrieved 1 May 2021.
  5. ^ de 2024, 9 de January (9 January 2024). "Venezuela, el país en el que una inflación de 193% puede ser una buena noticia". elpais (in European Spanish).{{cite web}}: CS1 maint: numeric names: authors list (link)
  6. ^ "BCV: Inflación de 2023 fue de 189,8% |". www.elnacional.com. Retrieved 24 January 2024.
  7. ^ EFE (21 February 2018). "Encovi: 61, 2% de los venezolanos está sumido en pobreza extrema". El Nacional (in Spanish). Retrieved 3 March 2018.
  8. ^ "Human Development Index (HDI)". hdr.undp.org. HDRO (Human Development Report Office) United Nations Development Programme. Retrieved 12 October 2022.
  9. ^ "Inequality-adjusted HDI (IHDI)". hdr.undp.org. UNDP. Retrieved 12 October 2022.
  10. ^ "Labor force, total – Venezuela, RB". data.worldbank.org. World Bank. Retrieved 9 April 2021.
  11. ^ "Sociales Fuerza de Trabajo". Instituto Nacional de Estadística. Archived from the original on 21 March 2016. Retrieved 20 January 2016.
  12. ^ "Venezuela facts and figures". Organization of the Petroleum Exporting Countries (OPEC). 2018. Retrieved 18 August 2018.
  13. ^ a b c "Venezuela". The Observatory of Economic Complexity. Retrieved 10 February 2019.
  14. ^ "Venezuela's Bondholder Meeting Is a Bust as S&P Declares Default". Bloomberg. 14 November 2017. Retrieved 15 November 2017.
  15. ^ "Moody's downgrades Venezuela rating by two notches". Reuters. 9 March 2018. Retrieved 10 March 2018.
  16. ^ "Fitch Downgrades Venezuela's LTFC Rating to 'RD'". Fitch Ratings. 14 November 2017. Retrieved 19 February 2018.
  17. ^ "BCV Reservas Internacionales". BCV. Retrieved 27 April 2018.
  18. ^ Lieuwen, Edwin; Heckel, Heather D.; McCoy, Jennifer L.; Martz, John D. (25 April 2021). "Venezuela". Britannica. Encyclopædia Britannica, Inc. Retrieved 1 May 2021.
  19. ^ a b "Venezuela: All you need to know about the crisis in nine charts". BBC News. 27 January 2019.
  20. ^ a b c "Lawyers as sex workers. Ex-bureaucrats as maids. How Venezuelans became Latin America's new underclass". Washington Post. 2018.
  21. ^ Turkewitz, Julie; Herrera, Isayen (24 September 2023). "Why Are So Many Venezuelans Going to the United States?". The New York Times. ISSN 0362-4331. Retrieved 1 August 2024.
  22. ^ "Venezuela country profile". BBC News. 19 September 2012.
  23. ^ Anthony, Craig (12 September 2016). "10 Countries with the Most Natural Resources". Investopedia.
  24. ^ "Risque pays du Venezuela : Commerce international". Societe Generale, Import Export solutions (in French). 1 May 2018. Archived from the original on 19 June 2018. Retrieved 19 June 2018. Traditionnellement, le pétrole représente plus de 95% des exportations du Venezuela. Le pays exporte aussi du fer, de la bauxite et de l'aluminium, des produits agricoles, des produits semi-manufacturés, des véhicules et des produits chimiques. Les principaux clients du Venezuela sont la Chine, l'Inde et Singapour. Le pays importe des produits manufacturés et de luxe, des machines et des équipements pour le secteur des transports, du matériel de construction et des produits pharmaceutiques. Les principaux fournisseurs du Venezuela sont les Etats-Unis, la Chine et le Brésil.
  25. ^ López Maya, Margarita (2016). El ocaso del chavismo: Venezuela 2005–2015. Editorial Alfa. pp. 349–51. ISBN 9788417014254.
  26. ^ "Venezuela's currency: The not-so-strong bolívar". The Economist. 11 February 2013. Retrieved 18 February 2013.
  27. ^ Mander, Benedict (10 February 2013). "Venezuelan devaluation sparks panic". Financial Times. Archived from the original on 12 February 2013. Retrieved 11 February 2013.{{cite news}}: CS1 maint: bot: original URL status unknown (link)
  28. ^ "Venezuela's economy: Medieval policies". The Economist. 20 August 2011. Retrieved 23 February 2014.
  29. ^ "Terminal Risks for Independent Fiscal Institutions: Lessons from IFIs in Hungary and Venezuela". Social Science Research Network (SSRN). Retrieved 18 July 2017.
  30. ^ Kurmanaev, Anatoly (17 May 2019). "Venezuela's Collapse Is the Worst Outside of War in Decades, Economists Say". The New York Times. ISSN 0362-4331. Retrieved 30 May 2019.
  31. ^ Cristóbal Nagel, Juan (13 July 2015). "Looking into the Black Box of Venezuela's Economy". Foreign Policy. Retrieved 14 July 2015.
  32. ^ Hanke, Steve (1 January 2019). "Venezuela's Hyperinflation Hits 80,000% Per Year in 2018". Forbes. Retrieved 26 March 2019.
  33. ^ Herrero, Ana Vanessa; Malkin, Elisabeth (16 January 2017). "Venezuela Issues New Bank Notes Because of Hyperinflation". The New York Times. Retrieved 17 January 2017.
  34. ^ Alhadeff, Samuel (October 2018). "Venezuelan Emigration, Explained" (PDF). www.wilsoncenter.org. Archived from the original (PDF) on 27 March 2019. Retrieved 26 March 2019.
  35. ^ Gillespie, Patrick (14 November 2017). "Venezuela just defaulted, moving deeper into crisis". CNNMoney. Retrieved 15 November 2017.
  36. ^ "Venezuela in 'selective default'". BBC News. 14 November 2017. Retrieved 15 November 2017.
  37. ^ Background Note: Venezuela U.S. Department of State. Retrieved 29 October 2011.
  38. ^ Caballero, Miguelangel (26 June 2022). "Más de USD 9.400 millones al año dejan las economías ilícitas en Venezuela". Transparencia Venezuela (in Spanish). Retrieved 11 October 2023.
  39. ^ Luján, Raylí (28 June 2022). "Volumen de operaciones ilegales en Venezuela es equivalente a 21% del PIB: Informe". Bloomberg (in Spanish). Retrieved 11 October 2023.
  40. ^ Soto, Naky (28 June 2022). "Illegal Activities Make Up 21% of Venezuela's GDP". Caracas Chronicles. Retrieved 10 August 2022.


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