Venezuela Economic Data & Projections

Venezuela Economic Outlook

A crisis-ridden economy:

Once one of Latin America’s wealthiest nations, Venezuela has experienced a historic economic collapse over the past decade. The country, which holds the world’s largest proven oil reserves, saw its GDP contract by over 75% between 2014 and 2021 due to economic mismanagement, falling oil production, and U.S. sanctions. Hyperinflation, widespread poverty, and a mass exodus of over seven million Venezuelans have further deepened the crisis. While recent policy adjustments have slowed inflation and brought modest growth in 2022 and 2023, economic conditions remain fragile.

Oil dependency and production decline:

The Venezuelan economy is almost entirely dependent on oil exports, which have historically accounted for over 90% of foreign earnings. However, years of underinvestment, corruption, and mismanagement at state-run oil company PDVSA have caused production to plummet from over 3 million barrels per day in the 1990s to around 800,000 barrels per day in 2023. U.S. sanctions, first imposed in 2017 and tightened in 2019, have further restricted Venezuela’s ability to sell oil in global markets, though some relief was granted in late 2023 in exchange for political reforms.

Hyperinflation and dollarization:

Venezuela suffered one of the worst episodes of hyperinflation in modern history, with inflation surpassing 1,000,000% in 2018. While inflation has since moderated, it remains one of the highest in the world. In response, the government has allowed widespread de facto dollarization, with most transactions now conducted in U.S. dollars rather than the nearly worthless Venezuelan bolívar. This has helped stabilize prices but has also led to economic duality, where access to dollars determines living standards, deepening inequality.

Humanitarian crisis and investment challenges:

Venezuela’s economic collapse has triggered severe humanitarian consequences, with widespread food and medicine shortages, infrastructure deterioration, and chronic power outages. While the private sector has seen some recovery in recent years, investment remains extremely low due to political uncertainty, weak property rights, and capital controls. International creditors remain wary, as Venezuela remains in default on billions of dollars in foreign debt.

Venezuela’s economic outlook:

The Venezuelan economy is expected to see slight improvements in the short term if oil production stabilizes and sanctions are eased. However, long-term growth prospects remain weak due to structural inefficiencies, political instability, and international isolation. Without significant institutional reforms, a revival of the oil sector, and a more favorable business climate, Venezuela is unlikely to regain its former economic standing.

Venezuela's Macroeconomic Analysis:

Nominal GDP of USD 129,313,578 billion in 2022.

GDP per capita of USD 4,804,160,106 compared to the global average of USD 10,589.

Average real GDP growth of 9.8% over the last decade.

Sector Analysis

In 2014, services accounted for 52% of overall GDP, manufacturing 12%, other industrial activity 31%, and agriculture 5%. Looking at GDP by expenditure, private consumption accounted for 75% of GDP in 2014, government consumption 15%, fixed investment 25%, and net exports -15%.

International trade

In 2013, manufactured products made up 2% of total merchandise exports, mineral fuels 98%, food 0%, ores and metals 0% and agricultural raw materials 0%, with other categories accounting for 0% of the total. In the same period, manufactured products made up 71% of total merchandise imports, mineral fuels 1%, food 18%, ores and metals 1% and agricultural raw materials 1%, with other goods accounting for 8% of the total. Total exports were worth USD 34 billion in 2018, while total imports were USD 13 billion.