Economic and Political Overview

flag Venezuela Venezuela: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

Endowed with the largest oil reserves in the world, Venezuela is largely dependent on fluctuations in oil prices. The country experienced a 6% GDP growth in 2022 due to the increase in oil prices and the recovery in remittances sent to the country by Venezuelans abroad, followed by an estimated growth of 4% in 2023. Despite the recent recovery, GDP remains only one-fourth of the pre-crisis level in 2013. Venezuela has been in a deep recession since 2013, and according to the IMF, its GDP contracted more between 2013 and 2018 than the United States did during the Great Depression of 1929-1933. For 2024, the IMF forecasts growth at 4.5%.

The country's industrial activity continues to suffer from insufficient diversification and difficulties in importing intermediate products. The policy of redistributing petroleum through social measures was hindered by the weakness of oil prices, which have been in sharp decline since 2012, only recently recovering. This has reinforced the macro-economic imbalances that Venezuela suffers from. The consumer price index in Venezuela settled at 193% during 2023, slightly lower than expected, according to figures provided by the Venezuelan Observatory of Finance. Although this is the highest rate in the world, it is much lower than the level recorded the previous year when inflation stood at 305%. The hyperinflationary climate was created by several years of monetizing the public deficit, a free-falling currency that makes imports more expensive, a strong depreciation of the currency in both the official and black markets, and dramatic shortages of basic goods. The central bank’s policy of reducing the money supply is not expected to help reduce hyperinflation sustainably, as it does not address the economy’s key imbalances.Despite multiple minimum wage hikes decided by the government, real wages have continuously decreased, and household consumption is highly dependent on remittances from expatriates. Venezuela's government anticipates a 27% rise in revenue from the state-operated oil company PDVSA in 2024, following a loosening of U.S. sanctions amidst planned presidential elections and stagnant production. President Nicolas Maduro's administration projects total expenditure for the year to reach USD 20.5 billion, representing a 39% increase on 2023 spending. The temporary easing of sanctions, scheduled to remain in effect until April 2024 unless reversed by the U.S., has caused a surge in prices for Venezuelan crude. Analysts anticipate that this increase in revenue will prompt additional social spending by the government, aiming to secure support in the upcoming presidential election, in which Maduro is likely to seek reelection. According to the latest available data from the IMF, public debt stood at 159.5% of GDP in 2022 (down from 248.4% one year earlier).

In Venezuela, even though the minimum wage has been increased numerous times over the past few years, wage increases have not kept up with inflation. Therefore, purchasing power is weak and has greatly decreased in recent years; poverty has increased, and the health system is in a critical state. The unemployment rate has been rising for years, and the IMF estimated that this rate has surpassed half of the Venezuelan workforce. Nevertheless, the state has not released an official unemployment figure since 2021, when it claimed it was 7.9%. Furthermore, the country also faces a rise in insecurity, with the highest homicide rate in South America. Because of the country's current economic situation, there are severe shortages of basic goods, such as food and medicine - with Venezuela being among the countries with the highest rates of food insecurity in the world. As such, neighboring countries have been receiving a large number of Venezuelan migrants and refugees in recent years, with estimates suggesting that over 6 million people have left the country so far.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 92.1097.12102.33105.880.00
GDP (Constant Prices, Annual % Change) 8.04.04.03.00.0
GDP per Capita (USD) 3,4223,6593,8673,9690
General Government Gross Debt (in % of GDP) 159.5148.20.00.00.0
Inflation Rate (%) 186.5337.5100.0150.00.0
Unemployment Rate (% of the Labour Force) 0.00.00.00.00.0
Current Account (billions USD) 3.313.314.824.200.00
Current Account (in % of GDP) 3.63.44.74.00.0

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

Compared to other Latin nations, agriculture has a smaller contribution to Venezuela's economy. The agricultural sector represents 5% of the Venezuelan GDP and employs 12% of the active population (World Bank, latest data available). The main agricultural products of the country are corn, soy, sugar cane, rice, cotton, bananas, vegetables, coffee, cocoa, beef, and pork meat, milk, eggs, and fish. However, Venezuela enjoys important natural resources, such as petroleum (their main natural resource), gas, gold, and silver mines, bauxite, and diamonds.

The industrial sector represents 37.2% of the GDP and employs 18% of the active population. The main industrial activities revolve around the petroleum sector - which is controlled by a State company and represents the first natural wealth of the country. According to OPEC, the country’s proved resources in petroleum stood at 303.22 billion barrels as of end-2022, which puts it in first place in the world ahead of Saudi Arabia. Actually, despite a continuous decline in petroleum production for the past few years, Venezuela remains largely dependent on revenue from petroleum, which accounts for nearly all of its earnings from exportation and for almost half of the government’s revenue. Additionally, other important industries are construction equipment, food, textile, iron, steel, aluminum, and engine parts assembly. However, due to the State control over the country's currency and prices, local industries have encountered difficulties acquiring the necessary goods to maintain operations or selling goods with profit on the local market. Overall, the manufacturing sector is estimated to account for 12% of GDP (World Bank). The private industrial production of Venezuela decreased by 4.3% in 2023 compared to the previous year, according to preliminary figures from the Confederation of Industrialists (Conindustria).

The service sector represents 51.7% of the GDP and employs 71% of the active population, making it a major source of revenue and jobs. The sector includes banking and finance, real estate, education, medicine, governmental agencies, hotels and restaurants, as well as entertainment. Together, these activities represent more than two-thirds of the total employment in Venezuela.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 13.1 17.5 69.4
Value Added (in % of GDP) 5.0 37.2 51.7
Value Added (Annual % Change) -4.6 -5.8 -0.4

Source: World Bank - Latest available data.

 

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Monetary Indicators 20162017201820192020
Venezuelan Bolivar (VEF) - Average Annual Exchange Rate For 1 MUR n/an/an/an/an/a

- Latest available data.

 
 

Find out all the exchange rates daily on our service Currency Converter.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
24,7/100
World Rank:
177
Regional Rank:
32

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
3.09/10
World Rank:
82/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

According to the latest available data, Venezuela’s foreign trade represented 67.2% of the GDP in 2017. The country’s economy strongly depends on hydrocarbons, as well as on loans from China and Russia. Traditionally, petroleum represents more than 75% of Venezuela’s exports. Manufactured products accounted for 16% of goods’ exports in 2021, and agricultural products for only 1.6% (data WTO). As per imports, the structure is as follows: agricultural products (34.7%), fuels and mining products (4.6%), manufactures (59.2%), and other (1.6% - data WTO, 2022).

According to the latest figures from OEC, Venezuela’s main export partners in 2022 were China (16.3%), Turkey (13.9%), Spain (12%), the U.S. (10.2%), and Brazil (8.3%). As per imports, China was the main source (31.4%), followed by the U.S. (23%), Brazil (13.8%), and Colombia (6.6%). Venezuela is a member of the Latin American Integration Association as well as the Global System of Trade Preferences among Developing Countries, and is looking to improve and increase its trade relations with the South-American zone, the EU, and China. However, even though Venezuela entered Mercosur in 2012 to develop trade with its neighbors, its membership was indefinitely suspended in 2017 because the country was infringing on the democratic clauses of the treaty.

According to the WTO, the country imported USD 10.1 billion of goods in 2022 and exported USD 4.7 billion of goods over the same period, marking increases of 30.7% and 33.2% year-on-year, respectively. Venezuela's foreign trade policy has been heavily impacted by international sanctions, particularly those imposed by the United States and other Western countries. These sanctions have targeted key sectors of Venezuela's economy, including oil exports, which historically formed the backbone of its foreign trade. As a result, Venezuela has faced significant challenges in accessing international markets and obtaining necessary imports, leading to shortages of essential goods and exacerbating economic instability. Additionally, the sanctions have constrained Venezuela's ability to engage in normal trade relations, forcing the country to seek alternative partners, often with limited success. The restrictions have also hindered foreign investment, further complicating efforts to diversify the economy and stimulate growth. Despite attempts by the Venezuelan government to navigate these challenges through various strategies, including increasing cooperation with countries like Russia and China, the impact of the sanctions continues to pose formidable obstacles to the country's economic recovery and stability.

 
Foreign Trade Indicators 20192020202120222023
Imports of Goods (million USD) 5,8706,5907,74510,14011,180
Exports of Goods (million USD) 17,2105,0103,5354,7508,470
Imports of Services (million USD) 00000
Exports of Services (million USD) 00000

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 
 
 
 
 

To go further, check out our service Import-Export Flows.

 

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Sources of General Economic Information

Ministries
Ministry of Economy, Finance and Foreign Trade
Ministry of Foreign Affairs
Ministry of Industries and National Production
Statistical Office
National Institute of Statistics (in Spanish)
Central Bank
Central Bank of Venezuela (in Spanish)
Stock Exchange
Caracas Stock Exchange (in Spanish)
Search Engines
Terra
Economic Portals
Business News Americas

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Political Outline

Current Political Leaders
President: Nicolás Maduro (since 19 April, 2013)
Executive Vice President: Delcy Rodriguez Gomez (since 18 June, 2018)
Next Election Dates
Presidential: 2024
National Assembly: December 2025
Main Political Parties
Venezuela has a multi-party system, where single parties rarely have the opportunity to secure power alone. Therefore, parties generally work together to form coalition governments. Yet, the Government also attempts to restrict the power of opposition groups and its allies. The government parties in the country are:

- United Socialist Party of Venezuela (PSUV): left-wing, socialist, maintains an overwhelming majority in the parliament
- Fatherland for All (PPT): left-wing, democratic socialist, libertarian Marxist
- Revolutionary Movement Tupamaro (MRT): far-left, communist, Marxist-Leninist, Guevarist
- Movement We Are Venezuela (MSV): left-wing, Chavista, socialist, anti-imperialism
- For Social Democracy (PODEMOS): centre-left to left-wing, social democratic
- Alliance for Change (APC): centre-left, social democratic, democratic socialist
- People's Electoral Movement (MEP): left-wing, socialist, nationalist
- Authentic Renewal Organisation (ORA): syncretic politics, Christian socialist, evangelical, conservative
- Venezuelan Popular Unity (UPV): left-wing, Bolivarian, communist, socialist.

Other parties include:
- Justice First (PJ): centre to centre-left, progressivism and humanism
- Democratic Action (AD): centre-left, social democracy, Venezuelan democracy
- Hope for Change (El Cambio):  centre, Christian democracy
- A New Era (UNT): centre-left, social democracy, reformism
- Popular Will (VP): centre-left, big tent, social democracy, market liberalism
- Radical Cause (LCR): centre-left, labourism, democratic socialism
- Progressive Advance (AP): centre-left, social democracy, progressivism, federalism
- Project Venezuela (ProVen): centre-right, Christian democracy, liberal conservatism
- Communist Party of Venezuela (PCV): far-left, fuelled by Marxist–Leninist ideals.

Type of State
The Bolivarian Republic of Venezuela is a federal presidential republic based on parliamentary democracy.
Executive Power
The President is both the Chief of State and the Head of the Government, and is elected by popular vote for a six-year term, renewable indefinitely. The President has executive power, appoints the Vice-President, decides on the size and composition of the cabinet, and makes appointments to it with the involvement of the parliament.
Legislative Power
The legislature is unicameral in Venezuela. The parliament, called the National Assembly, is made up of a variable number of members (277 seats currently) elected by popular vote to serve five-year terms. Three seats are reserved for the indigenous peoples of Venezuela. Legislative power is vested only in the National Assembly. The President has the power to veto acts of the National Assembly which, in turn, a simple majority of the Assembly can override. However, the President can also dissolve the National Assembly under certain conditions.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
148/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Partly Free
Political Freedom:
7/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Venezuela please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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Latest Update: May 2024