Venezuela’s economy grew by more than 5% in 2023, according to President Nicolás Maduro, who said growth would reach 8% this year. This marks the nation’s first economic expansion in the last decade — apart from a pandemic bounceback in 2022. Venezuela has been battered by a prolonged economic crash that saw inflation in the triple digits and contributed to an exodus of millions.
Last year’s expansion was driven largely by the easing of U.S. sanctions on Venezuela’s oil industry. The sanctions relief, which the U.S. agreed to in exchange for free and fair elections later this year, is slated to last until April. The Venezuelan government expects a 27% increase in income from the state-owned oil company in 2024, estimating that oil income alone would cover more than half of the nation’s total spending this year.
World should be wary of Maduro’s democracy promises, experts and lawmakers say
“The risk here is that [the deal with the U.S.] is based on promises by Maduro, and Maduro is not known as someone who keeps promises,” a former State Department diplomat told the Wall Street Journal last October. He warned that the lifted sanctions could be used to line the regime’s pockets and bolster its chances in this year’s elections. Republican lawmakers had also criticized the deal, saying the Biden administration enabled Maduro’s authoritarian government without concessions that would ensure fair elections. “Maduro got what he wanted,” Sen. Marco Rubio (R-Fla.) said at the time.
State-enabled illicit trade makes up large portion of Venezuela’s economy
Illicit economies — including drug trafficking, gold smuggling, and rhodium trafficking — accounted for about 16% of Venezuela’s GDP in 2022, according to nonprofit Transparency International and research and consulting firm Ecoanalítica. This is possible because of the “symbiotic relationship” criminal actors and state institutions enjoy in the nation, Transparency found. “The state is silent, the state cooperates, or the state facilitates,” said Mercedes de Freitas of Transparencia Venezuela. The U.S. has attempted to crack down on illegal commerce in Venezuela, according to the Government Accountability Office, but has so far found the volume of illicit financial flows “overwhelming.”
Economic growth could exacerbate income inequality
Venezuelan lawyer and economist Juan Carlos Valdez has urged onlookers to question who this economic growth is benefitting, arguing that “the majority of the population is not experiencing an improvement to its living standards.” Even as the economy showed signs of recovery in 2022, income inequality widened. A study from that year found that the poorest 10% in Venezuela survive on about $8 a month, compared to $553 for the country’s richest 10%, making it the most unequal country in Latin America.
“You cannot deny that the economy is growing,” one economist told BBC last year, but if you look beyond the areas where there have been improvements, you see a country still in ruins.”