Venezuela’s Economic Situation Improves, But Analysts’ Outlook Remains Tempered

Bloomberg Línea — The Venezuelan economic outlook is improving and is backed by figures, according to the president of market research firm Datanálisis, Luis Vicente León, with 40% of Venezuelans perceiving the country as ‘well’ or ‘very well’, a considerable increase compared to 97% who indicated that the country’s situation was ‘negative’ in a 2018 measurement

Speaking on the second day of the Economaratón 2022, León said however that “to return to the situation of 2013 would take 20 years at a rate of 10% [annual GDP growth], in order to grow 400% to return to what the country was,” referring to figures of the Venezuelan Finance Observatory (OVF).

Among the factors León highlighted that back up the better perception of Venezuela’s economic environment, the president of Datanálisis highlighted the recovery of the oil sector in prices and income for the country, the increase in confidence and negotiation expectations, as well as the changes in the strategies of President Nicolás Maduro’s government.

For example, the most recent OPEC data indicates that Venezuela increased its crude oil production in October by 51,000 barrels per day, reaching an average of 717,000 barrels per day, compared to 666,000 in September.

Regarding negotiation expectations, he said that “the things that can be changed must be negotiated: political and economic relations abroad, and the use of resources”, among other factors.

He added that the data show that there are expectations regarding the return of expropriated companies in the country and the elimination of that policy, as well as better spaces for dialogue between the government and the opposition, in addition to expectations of a better prospects for public and private employment.

GDP growth projections

The president of Datanálisis said that if there are better results from the oil industry in the country between 2022 and 2024, as well as a relaxation of the sanctions imposed by the United States, Venezuela’s GDP could see exponential growth, and of up to 30% per year, according to the OVF.

However, the outlook is not the same among ll experts, since economist Daniel Cárdenas explained in the Economaratón 2022 that in 2023 there would not be double-digit growth, since the oil increase would have already reached a “ceiling”, and salaries in real terms are low while inflation continues to advance.

For Cárdenas, “it is not possible to think that double-digit rates are sustainable over time. It is a miracle that there are such rates in a country where there is no credit, there is depreciation and there has been no recovery of public services”.

Meanwhile, economist Asdrúbal Oliveros pointed out that in order to recover the economic levels Venezuela enjoyed in 2013, it would take 18 years at an implicit rate of 9% and 48 years if it grows at a rate of 3.2% per year.