Rich in natural resources, with the largest oil reserves in Latin America and the Caribbean – and with some of the largest reserves in the world – Venezuela has immense potential.
Nicolás Maduro assumed the presidency of the country in April 2013 following the death of President Hugo Chávez.
In economic terms, Venezuela has benefited from historically high international oil prices over the past decade, which enabled increased government spending on ambitious initiatives. The government nationalized a number of private enterprises in the hydrocarbon, mining and metallurgy, cement, banking and telecommunications sectors.
Venezuela has achieved high rates of economic growth (5.6% in 2012). Nevertheless, GDP growth declined to just 1.6% in the first half of 2013 with respect to the same period of 2012. Short-term growth forecasts are modest.
Among the most important programs that oil revenues have helped fund are the large social programs called Misiones. Economic growth and the redistribution of resources associated with these Misiones have reduced moderate poverty significantly, from 50% in 1998 to 25% in 2012. Inequality has also declined, as evidenced by the Gini Index, which fell from 0.49 in 1998 to 0.39 in 2011, one of the lowest rates in the region.
However, Venezuela continues to face daunting challenges. Its economy is extremely vulnerable to fluctuations in international oil prices given that oil accounts for over 96% of the country’s exports and nearly half of its fiscal revenue. Despite high oil prices, Venezuela has experienced major fiscal deficits along with a sharp increase in public debt (27% of GDP in 2012). In addition, international reserves have fallen, representing fewer than five months of imports.
Moreover, as a result of the strongly expansive monetary policy aligned with the country’s fiscal objectives, the annual inflation rate reached 42.6% in June 2013.
- Name: Bolivarian Republic of Venezuela.
- Population: 29.9 million (estimated, 2012).
- Capital: Caracas.
- Other important cities: Maracaibo, Valencia, Maracay, Barquisimeto, Mérida, San Cristóbal and Barcelona-Puerto La Cruz.
- Area: 916,445 km².
- Currency: Bolívar.
- Per capita GDP: US$ 12.756 (2012)
- Exports: Oil.
- Language: Spanish.
- Religion: Catholic majority.
- Life expectancy: 74 years (2011).