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flag Venezuela Venezuela: Economic and Political Outline

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

With the largest oil reserves in the world (297 billion barrels), Venezuela is, in 2014, the fifth largest Latin-American economy, after Brazil, Mexico, Argentina and Colombia. It depends excessively on the fluctuations in oil prices. Venezuela's economy was strongly affected by the global economic crisis, the growth of its GDP contracted between 2008 and 2010 before coming back in 2011 (+4.2%) and 2012 (+5.6%) (IMF 2014). In 2013 growth has reached only 1% and the forecast for 2014 is 1.7%.

The Venezuelan growth model rests on two pillars: domestic consumption (over 72% of GDP) and high public spending (estimated at 35% of the GDP for 2013), oriented towards redistributing the revenues from oil in favor of the least privileged population groups. Poverty has sharply decreased in the recent time, from 54% to 23,4% in 2013.

In this context, the priority of the government is to get Venezuela out of the crisis. Facing a high increase in inflation (21% in 2012 and around 38% in 2013 according to the IMF), the government introduced a new exchange system (the third), "Sicad 2", an alternative system of exchange of currencies that allows holders of bonds in bolivar (VEF) to convert them into dollars at a certain rate. This is supposed to bring closer the official dollar exchange rate (1 USD = 6.3 VEF), with its real value on the black market (1 USD = 70 VEF). The government must also deal with the conjunction of two major sectoral crises: lack of water in the country and the production shortfall in the electricity sector. The debt owed to China, who became a major trading partner, has risen sharply in recent years

The economic model of the Venezuelan economy combines state-managed oil rent economy, mass consumption and increasing socialization of the means of production. The country's wealth is unevenly distributed within the population. The unemployment rate reached 7.8% in 2013 after 8% in 2012. While the country lives on its oil revenues, the exploding cost of living has huge social consequences and Venezuela is currently in a state of great instability, reinforced by the death of President Chavez.

 
Main Indicators 20112012201320142015 (e)
GDP (billions USD) 297.64298.38227.18e209.23e226.32
GDP (Constant Prices, Annual % Change) 4.25.61.3e-3.0e-1.0
GDP per Capita (USD) 10,238e10,1097e6,870e7,316
General Government Gross Debt (in % of GDP) 43.3e46.0e52.146.241.3
Inflation Rate (%) 26.121.140.664.362.9
Unemployment Rate (% of the Labor Force) 8.27.87.58.010.4
Current Account (billions USD) 24.3911.02e11.39e15.87e14.48
Current Account (in % of GDP) 8.23.7e5.0e7.6e6.4

Source: IMF - World Economic Outlook Database , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

The agricultural sector of Venezuela contributes to 3.7% of the GDP and employs around 7% of the active population. The main agricultural products of the country are: corn, soya, sugar cane, rice, cotton, bananas, vegetables, coffee, beef and pork meats, milk, eggs and fish. Venezuela benefits from important natural resources: oil, gas, gold and silver mines, bauxite and diamonds.

According to the OPEC, proven oil reserves of the country reach 296.50 billion barrels, which makes it a world leader ahead of Saudi Arabia.

The industrial sector represents 35.5% of the GDP and employs around 22% of the active population. The main industrial activities are oil (controlled by a state's company, oil represents the first natural wealth source of the country), construction material, foodstuffs, textile, iron, steel, aluminum and motor-car assembly.

The services sector has represented 60.8% of the GDP in 2013 and employed 71% of the active population.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 7.7 21.2 70.7
Value Added (in % of GDP) 5.8 52.2 42.1
Value Added (Annual % Change) 5.2 7.4 3.5

Source: World Bank - Last Available Data.

 
 
 
Monetary Indicators 20092010201120122013
Venezuelan Bolivar (VEF) - Average Annual Exchange Rate For 1 USD 2.152.584.294.296.05

Source: World Bank - Last Available Data.

 
 

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, labor 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:
36.3/100
Position:
Repressed
World Rank:
175/178
Regional Rank:
28/29

Distribution of Economic freedom in the world
Source: 2014 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:
3.93
World Rank:
82/82

Source: The Economist - Business Environment Rankings 2014-2018

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Foreign trade in Venezuela represents about one third of the GDP.  The country is trying, above all, to improve and to increase its trade relations with the Latin American zone, the EU and China. Venezuela officially joined the Mercosur on July 31, 2012. With the entry of Venezuela, Mercosur has become the fourth trading bloc after the European Union, NAFTA and ASEAN. However, the United States remains the first buyer of Venezuelan oil and the largest economic and trading partner. It pays for its purchases at market prices, which represents Venezuela's largest source of cash.

Venezuela exports oil, iron bauxite and aluminum, agricultural products, semi-manufacturing products, vehicles and chemical products. Its main clients are:  the United States (over 40% of total export in 2013), China (from 8% to 20% in two years) and India. The country imports manufactured and luxury products, machinery, transportation equipment, construction material and pharmaceutical products. Venezuela's main suppliers are: the United States (25% of imports in 2013), China, the EU and Brazil.

The trade balance of Venezuela is structurally very positive due to its richness in oil. It reflects the significant share of oil in the country's economy, despite the increasing difficulties faced by this sector, following those of the entire business environment in the country. In 2013, oil exports (over 12% of GDP) have increased. They represented 96.3% of export revenues and 40% of the Federal budget. A growing part of oil revenues are orientated towards the financing of social projects and policies (in domestic public expenditure and in support of allies abroad) at the expense of production investment. Non-oil exports, which accounted for 35% of the total in the 1990s, have been considerably reduced (less than 4% in 2013), a consequence of the weakening of the productive apparatus and of an increased reliance on oil revenues.

 
Foreign Trade Indicators 20092010201120122013
Imports of Goods (million USD) 40,59739,50048,20060,50053,500
Exports of Goods (million USD) 57,59565,74592,81197,34086,700
Imports of Services (million USD) 9,22312,55515,03117,07617,109
Exports of Services (million USD) 1,8051,6271,7021,8511,926
Imports of Goods and Services (Annual % Change) -19.6-2.915.424.4-9.7
Exports of Goods and Services (Annual % Change) -13.7-12.94.71.6-6.2
Imports of Goods and Services (in % of GDP) 20.417.619.724.2-
Exports of Goods and Services (in % of GDP) 18.128.529.926.2-
Trade Balance (million USD) 16,43427,23446,02638,031-
Trade Balance (Including Service) (million USD) 6,46216,00932,30122,042-
Foreign Trade (in % of GDP) 38.546.149.650.4-

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2013
United States 0.6%
China 0.3%
Colombia 0.3%
Netherlands 0.2%
Brazil 0.2%
See More Countries 98.4%
Main Suppliers
(% of Imports)
2013
United States 23.3%
China 17.0%
Brazil 10.0%
Colombia 5.0%
Mexico 5.0%
See More Countries 39.7%

Source: Comtrade, Last Available Data

 
 

Main Products

- bn USD of products exported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 85.1%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 12.5%
Acyclic alcohols and their halogenated,...Acyclic alcohols and their halogenated, sulphonated, nitrated or nitrosated derivatives 0.7%
Iron ores and concentrates, incl. roasted iron...Iron ores and concentrates, incl. roasted iron pyrites 0.3%
Ferrous products obtained by direct reduction of...Ferrous products obtained by direct reduction of iron ore and other spongy ferrous products, in lumps, pellets or similar forms; iron having a minimum purity by weight of 99,94%, in lumps, pellets or similar forms 0.2%
See More Products 1.2%
- bn USD of products imported in 2013
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 5.7%
Tubes, pipes and hollow profiles, seamless, of...Tubes, pipes and hollow profiles, seamless, of iron or steel (excl. products of cast iron) 2.0%
Meat of bovine animals, frozenMeat of bovine animals, frozen 1.9%
Maize or cornMaize or corn 1.8%
Structures and parts of structures e.g., bridges...Structures and parts of structures e.g., bridges and bridge-sections, lock-gates, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns, of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures, of iron or steel (excl. prefabricated buildings of heading 9406) 1.7%
See More Products 86.9%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 
 
 

Main Services

- bn USD of services exported in 2011
38.26%
31.12%
14.33%
8.62%
6.75%
0.49%
0.34%
0.10%
- bn USD of services imported in 2011
39.20%
20.09%
18.79%
5.16%
5.15%
4.31%
2.85%
2.79%
1.16%
0.50%

Source: Comtrade, Last Available Data

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Sources of General Economic Information

Ministries
Ministry of Planification and Finance
Statistical Office
National Institute of Statistics (in Spanish)
Central Bank
Central Bank of Venezuela
Stock Exchange
Caracas Stock Exchange
Search Engines
Auyantepuy
Elvenezolano
Terra
Economic Portals
Business News Americas

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Political Outline

Executive Power
President is both the chief of state and the head of the government. He is elected by popular vote for a six-year term. He has executive power. The president appoints the Vice-President. He 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, consists of 167 seats with its members 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. President has the power to veto acts of the National Assembly which in turn a simple majority of the Assembly can override. However, President has the power to dissolve the National Assembly under certain conditions. The people of Venezuela have limited political rights.
Main Political Parties
Venezuela has a multi-party system, where no single party ever really has the chance of gaining power alone. Therefore, parties generally work with each other in order to form coalition governments. The major parties in the country are:
- COPEI - Christian democrats; has dominated country's politics for the last fifty years;
- AD (Democratic Action) - a social democratic party, draws major support base from trade unions;
- MVR (Fifth Republic Movement) - advocates left-wing socialism and populism;
- MAS (Movement for Socialism) - a social-democratic political party;

- PPT (Homeland for All) - left-wing political party, advocates personal liberty and social justice.

The majority party of today is the one created by President CHAVEZ:  PSUV: The United Socialist Party of Venezuela.

Current Political Leaders
Chief of State: President Nicolas MADURO Moros (since 8 March 2013) - Partido Socialista Unido de Venezuela, PSUV
Next Election Dates
Presidential: n.c
National Assembly: December 2015
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures the 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 sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. 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:
116/180
Evolution:
1 place up compared to 2013

Source: Worldwide Press Freedom Index 2014, 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:
5/7

Map of freedom 2014
Source: Freedom House

 

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Last Updates: October 2014