Venezuela Economic Outlook
In late December, the Central Bank communicated that the economy grew 13.2% in year-on-year terms in the third quarter of 2022, down from the 23.3% expansion it reported in the previous quarter. A sharp slowdown in oil activity was behind the deceleration. Economic conditions seemingly weakened in Q4; the annual increase in oil production slowed compared to Q3 amid falling oil prices. Data for Q1 2023 is scarce, though oil prices and production increased in January from the previous month. In politics, worsening relations recently between the administration and the opposition party bode ill for President Maduro’s international reputation and could risk further sanctions. More positively, in mid-February, the country signed a deal with Colombia in order to revive bilateral trade.
Inflation dipped to 156% in October 2022—the last month of available data—from September’s 157%. Inflation is projected to accelerate this year. Sustained monetary financing of the fiscal deficit should fuel it. Unanticipated policy changes, volatile global commodity prices and currency depreciation pose risks.