Venezuela entered a recession in 2014, and the country faces a number of economic hurdles, including rising inflation, basic goods shortages, and declining oil prices. This month, President Nicolás Maduro went on a tour to China, Russia, the Middle East, and North Africa in a bid for new investment and to persuade countries to limit oil production. On January 21, he gave his annual presidential address before the National Assembly, announcing new economic measures including raising domestic gas prices and loosening the three-tiered exchange rate system. Meanwhile, anti-government protests have begun to bubble in San Cristobal, where last year’s national protests originated. Plus, new opposition protests took place in Caracas on January 24.
Here are seven charts that illustrate why the Andean country—heavily reliant on oil revenues—faces economic challenges.
Venezuela’s Central Bank waited until the very end of the year to announce GDP data. The Bank’s data shows the economy contracted by 4.8 percent in the first quarter, 4.9 percent in the second quarter, and 2.3 percent in the third quarter. The UN Economic Commission for Latin America and the Caribbean estimates that overall, Venezuela’s GDP shrank by 3 percent in 2014. The previous year, it grew by 1.3 percent.
Venezuela relies on oil for around 95 percent of export earnings, while oil and gas account for about a quarter of the country’s GDP.
In recent months, global oil prices fell considerably, decreasing 60 percent since June. Meanwhile, during the third quarter of 2014, Venezuelan exports fell by over 14 percent.
Oil Production and Prices
According to the latest data from the Organization of the Petroleum Exporting Countries (OPEC), Venezuela hosts the world’s largest proven oil reserves. While Venezuela’s reserves far exceed that of its oil-exporting neighbors, its crude oil production does not. In 2013, Venezuela produced only 11 percent more crude oil than Mexico.
Plus, crude production stagnated in recent years. From 2009 to 2013, annual production of crude oil fell by about 3 percent. Similarly, daily average crude production fell by nearly 4 percent since 2000.
Inflation and Shortages
Venezuela has the highest inflation rate in the Americas. In November, 12-month inflation hit 63.6 percent.
In addition, the country faces shortages of basic goods from toilet paper to milk. The Central Bank used to publish a so-called scarcity index to measure the percentage of goods missing from shelves. When it last published the index in March 2014, that number stood at nearly 30 percent. In mid-January, the president of the Venezuelan Federation of Chambers of Commerce told news agency EFE that the country’s basic goods inventory may only last another 45 days.