Venezuelan residents protest in opposition to the outcomes of their nation’s presidential election, in Quito, Ecuador, Saturday, Aug. 3, 2024 | Photograph credit score: AP
On July 28, Venezuelan President Nicolás Maduro returned to energy after a disputed election, the outcomes of which have been questioned by the opposition and a number of other international locations. The unpopularity of Maduro’s regime is just not doubtful, as he oversaw an economic system that plummeted in his 11 years in energy. The nation’s annual inflation charge soared into 5 digits, together with shortages of primary provides. The democracy index fell, and bribery charges hit new highs. The humanitarian and financial situations have triggered a mass exodus, with as much as 7.7 million Venezuelans fleeing the nation.
Chart 1 The chart exhibits how Venezuela’s GDP (at present costs) started to say no since Maduro got here to energy in 2013. In accordance with the IMF, Venezuela’s actual GDP skilled the longest contraction in trendy historical past over the previous decade. Between 2013 and 2021, the economic system shrank by 75%, the biggest for any nation not at conflict.
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Chart 2 The chart exhibits Venezuela’s annual inflation charge. The nation’s inflation soared to a peak of 65.374%, resulting in hyperinflation in 2018, and remained in additional than three digits for 9 years.
Chart 3 exhibits how Venezuela fares on two indices maintained by the V-dem (Sorts of Democracy) Institute: the Liberal Democracy Index and the Government Corruption Index.
Since 1999, the 12 months that marked the start of the Chavismo period with the rise to energy of Maduro’s predecessor, the late Hugo Chávez, the nation has declined within the liberal democracy index and seen an increase within the corruption index. As of 2023, V-dem classifies the nation as an electoral autocracy. Chávez’s rise coincided with a preferred motion in opposition to the entrenched two-party system, which was seen as incapable of empowering the plenty. His regime sought to redistribute revenues from its burgeoning oil extraction business within the type of welfare, making certain that the nation’s dependence on this business turned much more entrenched.
Venezuela has the biggest crude oil reserves on the planet. As Chart 4 exhibits, Venezuela’s oil exports accounted for round 80% of the nation’s exports and remained within the vary of 70% to 96% between 1960 and 2023, making the nation a “petrostate.” Oil exports additionally account for 14% of the nation’s GDP (as of 2023) and till 2019 remained above 20%.
Chart 4 exhibits Venezuela’s oil exports as a proportion of whole exports and GDP (in %).
Nevertheless, crude oil manufacturing has declined considerably over time. In comparison with 1973, when the nation produced 3.36 million barrels per day, the determine dropped to 0.78 million in 2023 (Chart 5). The variety of lively oil rigs within the nation fell from 221 in 2014 to only three in 2023. Venezuela was the biggest crude oil producer amongst OPEC international locations till 1969. However as of 2023, it ranks ninth in crude oil manufacturing. The drastic manufacturing cuts are instantly associated to the sanctions imposed by the US regime led by Donald Trump in 2017, a time when oil costs recovered globally.
Chart 5 exhibits Venezuela’s crude oil manufacturing (in 1,000 barrels per day) and lively oil rigs versus the nominal oil worth over time.
For a few years, the pattern of Venezuela’s exports and imports of products and providers adopted that of oil costs (Chart 6). Nevertheless, the present improve in oil costs has not led to a proportional improve in exports and imports because of the imposition of sanctions by the US. Since 2023, following the Barbados settlement, the US eased a few of its sanctions and this allowed for a rise in exports. Nevertheless, subsequent measures by the Maduro regime to ban opposition candidates led to a reimposition of sanctions.
Chart 6 exhibits Venezuela’s exports (thousands and thousands of {dollars}) and imports (thousands and thousands of {dollars}) in opposition to oil costs ($/bb)
Supply: OPEC, IMF, V-Dem
Learn additionally: Nicolás Maduro, the designated successor of Chavismo
