Venezuela: Economic and Political Overview
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. In 2024, the IMF estimated growth at 3%, with a similar outlook for 2025. In 2024, Venezuela's economic activity grew by 3.9%, according to the figures from the Venezuelan Finance Observatory. It is worth noting that over 70% of this economic growth is attributed to the significant increase in oil production, which rose by 12.3% in 2024, largely driven by Chevron's contribution. Meanwhile, non-oil economic activity saw a rise of 3.9%. For 2025, the IMF forecasts growth at 3%.
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 macroeconomic imbalances that Venezuela suffers from. According to official governmental figures, Venezuela's inflation closed at 48% in 2024 as prices showed a slowdown compared to 2023, when the inflation rate was 189.8%, (data from the Central Bank). The hyperinflationary climate registered in recent years was created by a period 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 Venezuelan government is planning a budget of USD 22.7 billion for 2025, marking an increase of nearly 11% compared to last year's spending of USD 20.5 billion, with contributions from state-run oil company PDVSA expected to fall 14.6% amid international sanctions. Income from PDVSA, through sales and taxes, will cover 53% of the government's spending needs, amounting to USD 10.1 billion, based on the exchange rate calculated by Venezuela's central bank. In 2024, PDVSA contributed USD 11.9 billion. Tax revenues will contribute USD 5.25 billion to the budget, financing 28% of the spending, according to the document. Additional funding will come from mining, loans, and debt issuances.
Despite multiple minimum wage hikes decided by the government, real wages have continuously decreased, and household consumption is highly dependent on remittances from expatriates. 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, 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 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 99.20 | 106.33 | 109.96 | 0.00 | 0.00 |
| GDP (Constant Prices, Annual % Change) | 4.0 | 3.0 | 3.0 | 0.0 | 0.0 |
| GDP per Capita (USD) | 3,738 | 4,019 | 4,122 | 0 | 0 |
| General Government Gross Debt (in % of GDP) | 146.3 | 0.0 | 0.0 | 0.0 | 0.0 |
| Inflation Rate (%) | 337.5 | 59.6 | 71.7 | 0.0 | 0.0 |
| Unemployment Rate (% of the Labour Force) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Current Account (billions USD) | 3.07 | 4.34 | 3.68 | 0.00 | 0.00 |
| Current Account (in % of GDP) | 3.1 | 4.1 | 3.3 | 0.0 | 0.0 |
Source: IMF – World Economic Outlook Database, October 2021
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 10.6% 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, 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. Crop output in 2024 is expected to be slightly above the average of the past five years, as the agricultural sector continues to recover from the economic recession that resulted in a record low maize production in 2020. While cereal production in 2024 is projected to exceed the previous five-year average, it remains below the levels seen in the pre-crisis period (2010–2014), when the country's average output was approximately 3.4 million tonnes. Cereal import requirements for the 2024/25 marketing year (July/June) are projected to be close to the five-year average, due to the significant national stocks resulting from the above-average production in 2024 (data FAO).
The industrial sector represents 37.2% of the GDP and employs 18.5% 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-2023, 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's 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 surged by 16.8% in 2024 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 70.9% 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. The Venezuelan banking sector has experienced a positive shift since the reduction of the legal reserve requirement from 85% to 73% in 2022, with the reserve currently maintained at this level. As of March 2024, monetary liquidity in the country reached 89.008 billion bolivars, marking a 14.6% increase compared to the previous month. This growth has occurred despite the dollar and inflation remaining relatively under control (data Chambers and Partners).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 10.6 | 18.5 | 70.9 |
| 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. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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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.}}
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Source: Index of Economic Freedom, Heritage Foundation
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.
Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025
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