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

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Endowed with the largest oil reserves in the world, Venezuela is largely dependent on fluctuations of oil prices. The country had a 5% decline of GDP in 2021, due to the lingering impacts of the pandemic and heightened U.S. sanctions. However, the situation should improve slightly in the coming years, with the IMF predicting a negative growth of 3% for 2022 and 0% for 2023. The country has been in a deep recession since 2013 and, according to the IMF, Venezuela’s GDP contracted more between 2013 and 2018 than the United States did during the Great Depression of 1929-1933.The GDP per capita nearly halved between 2019 and 2021, going from USD 2,299 to USD 1,627, and should continue down the same trajectory in the short term. 

The industrial activity continues to suffer from insufficient diversification and difficulties to import intermediate products. The policy of redistribution of the petroleum through social measures was impeached by the weakness of the oil prices, in strong decline since 2012. This reinforced the macro-economic imbalances that Venezuela suffers from.According to the Central Bank of Venezuela, the country's hyperinflation went from 6,500% in 2020 to 686.4% in 2021, demonstrating a deceleration of consumer price growth thanks to inflation control measures but in place by the government, which include the restriction of credit and lower spending in bolivars to maintain the stability of the exchange rate. The hyper-inflationary climate was created by several years of monetising 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 been continuously decreasing, and household consumption is highly dependent on remittances from expatriates. Even though remittances to the country significantly decreased amid the COVID-19 crisis, growth in the host countries of Venezuelan expatriates, such as Colombia, Spain, the United States, should increase remittance flows in 2022, supporting some recovery in household consumption. According to the latest available data from the IMF, public debt rose to 304.1% of the GDP in 2020. However, Coface estimates that public debt stood at 315% in 2021, and it should slightly decrease to 310% in 2022. To mitigate the impact of COVID-19, the government implemented a series of fiscal measures in 2020 and 2021. However, the country was already facing significant social and economic issues before the pandemic, so the impact of COVID-19 on Venezuela compounded on preexisting issues of economic instability, and health and food insecurity.

In Venezuela, even though minimum wage has been increased numerous times over the past few years, wage increases have not been following inflation. Therefore, purchasing power is weak and has greatly decreased in recent years; poverty has increased and the health system is in critical state. The unemployment rate has been rising for years, and the IMF estimated that, in 2021, that rate surpassed half of the Venezuelan workforce, reaching 57.3%. Nevertheless, the state has not released an official unemployment figure since 2016, when it claimed it was 7.3%. Furthermore, the country also faces a rise of 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, neighbouring 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 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 63.96e47.26e44.8943.550.00
GDP (Constant Prices, Annual % Change) -35.0e-30.0-5.0-3.00.0
GDP per Capita (USD) 2,299e1,6911,6271,6180
General Government Gross Debt (in % of GDP) 232.8304.10.00.00.0
Inflation Rate (%) 19.02.02.02.00.0
Unemployment Rate (% of the Labour Force) 0.00.00.00.00.0
Current Account (billions USD) 4.97-2.030.13-0.300.00
Current Account (in % of GDP) 7.8e-4.30.3-0.70.0

Source: IMF – World Economic Outlook Database , October 2021

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 7.8% of the active population. 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. According to the OPEC, the country’s proved resources in petroleum would reach 302,809 million of barrels which puts it at the first place in the world in front of Saudi Arabia. Actually, despite a continuous decline of the 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. In 2021, the country experienced food shortages due to lack of diesel, as more than 90% of producers were unable to prepare land for cultivation because they didn't have fuel to plough area for cultivation. Besides the shortages of fuel, the high cost of transportation and the country's hyperinflation, which were aggravated by the COVID-19 pandemic, led to a decrease in agricultural product sales in 2021.

The industrial sector represents 37.2% of the GDP and employs 15.3% 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. Additionally, other important industries are construction equipment, food, textile, iron, steel, aluminium and engine parts assembly. However, due to the State control over the country's currency and prices, local industries have encountered difficulties to acquire the necessary goods to maintain operations or to sell goods with profit on the local market. Although these difficulties were aggravated by the pandemic, particularly in the oil industry, the sector showed a significant recovery in 2021. Venezuela almost doubled its oil output mainly thanks to a deal struck between the state-owned Petroleos de Venezuela and the National Iranian Oil Company, to pump and process more extra heavy crude into exportable grades.

The service sector represents 51.6% of the GDP and employs 76.1% 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. Although the COVID-19 crisis negatively impacted the Venezuelan economy as a whole, the services sector was hit the hardest, and it's still feeling the impacts of the pandemic.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 7.9 15.3 76.8
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.

 

Find more information about your business sector on our service Market Reports.

 
 
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.

Learn more about Market Analyses about Venezuela on Globaltrade.net, the Directory for International Trade Service Providers.

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 is strongly depending on hydrocarbons, as well as on loans from China and Russia. Traditionally, petroleum represents more than 85% of Venezuela’s exports. Other exports include acyclic alcohols (2.2%), iron reductions (1%), gold (1.5%), crustaceans (0.9%), and hard liquor (0.4%). The country mainly imports refined petroleum (16.8%), rice (4.3%), corn (3.5%), wheat (2%), and medicaments (2%). According to IMF Foreign Trade Forecasts, the volume of exports of goods and services decreased by 50.1% in 2020 and fell by an estimated 20.8% in 2021, while the volume of imports of goods and services decreased by 19.5% in 2020 and declined by an estimated 5.3% in 2021. The unprecedented fall in volume of imports and exports in 2020  and 2021 was mainly due to lower global demand which resulted from the COVID-19 pandemic.

Venezuela’s main trade partners are the United States, China, India, Mexico, Turkey, and Brazil. The United States remains the main petroleum customer. The country purchases petroleum at the market price and constitutes, consequently, Venezuela's first source of currency. 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 in order to develop trade with its neighbours, its membership indefinitely suspended in 2017 because the country was infringing on the democratic clauses of the treaty.

According to the WTO, the country imported  USD 6.5 billion of goods in 2020 and exported USD 4.9 billion of goods over the same period, resulting on a trade balance of USD 1.6 billion. However, even though the amount of exports was significant in 2020, they have decreased by over 85% since 2018, notably due to the fall of petroleum prices and lower global demand brought on by the pandemic.

 
Foreign Trade Indicators 20162017201820192020
Imports of Goods (million USD) 13,55010,51011,7105,8706,590
Exports of Goods (million USD) 24,63032,54034,44017,2104,980
Imports of Services (million USD) 18,52906,88400
Exports of Services (million USD) n/a077200
Trade Balance (million USD) 11,061n/an/an/an/a
Trade Balance (Including Service) (million USD) 2,874n/an/an/an/a

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

 
 
 
 
 

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

 
 

Main Services

0.8 bn USD of services exported in 2018
44.11%
31.58%
11.78%
7.14%
2.38%
1.50%
0.75%
0.50%
0.25%
7.3 bn USD of services imported in 2018
29.40%
25.35%
16.20%
13.77%
4.51%
2.73%
2.68%
2.50%
2.10%
0.75%

Source: United Nations Statistics Division, Latest Available Data

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Political Outline

Current Political Leaders
President: Nicolás Maduro (since 19 April, 2013). However, his presidency has been disputed with the Interim President, Juan Guaidó, since 10 January, 2019
Executive Vice President: Delcy Rodriguez (since 18 June, 2018)
Next Election Dates
Presidential: 2024
National Assembly: 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

Other parties include:
- Justice First (PJ): centre to centre-left, progressivism and humanism
- Democratic Action (AD): centre-left, social democracy, Venezuelan 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 National Assembly, 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

Source: World Press Freedom Index, Reporters Without Borders

 

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

COVID-19 epidemic evolution
To find out about the latest status of the COVID19 pandemic evolution and the most up-to-date statistics on the COVID19 disease in Venezuela, please visit the Ministry of Health with the official data. Official information on the progress of the epidemic in Venezuela is consolidated by the government platform. The site provides a daily epidemiological update, which includes key national figures.
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures
To find out about the latest public health situation in Venezuela and the current sanitary measures in vigour, please consult the Venezuelan government website including the up-to-date information on the containment measures put in place and public health recommendations.
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.

The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the portal of the Integrated National Service of Customs and Tax Administration (SENIAT).
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Venezuela on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the information on the economic recovery scheme put in place by the Venezuelan government to address the impact of the COVID19 pandemic on the Venezuelan economy, please visit the website of the Ministry of Economy and Finance. The information on the Venezuelan economic emergency plan is available here.

For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Venezuelan government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Venezuela in the IMF’s Policy Tracker platform.
Support plan for businesses
For the information on the local business support scheme established by the Venezuelan government to help small and medium-sized companies to deal with the economic impacts of the COVID19 epidemic on their activity, please consult the portal of the Ministry of Economy and Finance, the Economic Policy Response to Covid-19, and the Official Gazette on the Ministry of Communication and Information.

For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters
To find out about the support plan for exporters put in place by the Venezuelan government, please consult the support plan for Venezuelan exporting companies available on the Ministry of the Venezuelan Vice President website.
 

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Latest Update: April 2022