Something Strange Is Happening with Venezuela’s Economy | VisualEconomik EN

Added: 2026-05-12

[00:00:03]The United States has a reputation for meddling in other countries' affairs, so to speak. Sometimes it goes terribly wrong, as we're seeing right now in Iran. Other times, the intervened countries may improve temporarily, but then revert to their old ways, as happened in Afghanistan, where as soon as Uncle Sam left, everything completely collapsed. But contrary to what many people believe, there are also major success stories like Japan, where following its surrender in World War II and US intervention, the country took off economically. And so, keeping this in mind, I think the question is clear.

[00:00:33]What will happen in Venezuela? On the face of it, Venezuela has all the elements for this regime change operation to be a success. There's no need to reinvent the wheel. It's easy enough to return the country to the institutional framework it had before Chavismo. However, the fact that Trump has kept Delcy Rodríguez in power raises many questions. And here on Visual Economic, we don't have a crystal ball, but we can start to offer some answers.

[00:00:55]Venezuela's economy is accelerating, but will depend on more than oil. After 19 consecutive quarters of moderate growth, Venezuela's economy is showing signs of a remarkable breakthrough with an expansion of some 12% now possible this year. 12% annually. That's more than China in its best years. The data points to a full-blown economic boom. That said, there are quite a few caveats. If everything were as rosy as it seems at first glance, there wouldn't have been massive protests just a few days ago demanding higher wages. Although, if you think about it, the mere fact that there are protests isn't a bad sign. Be that as it may, today we'll be talking about the good, the bad, and the ugly in regards to the Venezuelan economy since Nicolás Maduro left power. Are we looking at a success or another major failure of US interventionism? Well, let's take a look. But first, be honest, how many AI tools are you using right now? One for writing, another for images, maybe a couple more for video or coding. It adds up fast, and so does the cost. That's exactly where Chat LLM by Abacus AI comes in. Instead of juggling multiple platforms, Chat LLM brings all the top AI models together in one place.

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[00:03:15]>> [music] >> Venezuela could grow by 12% this year.

[00:03:18]At first glance, that seems like a lot, but the truth is that if we take the whole context into account, it's not that crazy, either. First and foremost, we must clarify that the GDP estimates from the Central Bank of Venezuela, or BCV, and private consulting firms have been very, very different. In 2023, for example, the BCV stated that the economy was growing at 5%, while the consulting firms believed it was still in the red.

[00:03:42]In any case, there are two things we can say with absolute certainty. The first is that the COVID crisis, combined with the 2019 sanctions, was devastating for the Bolivarian economy. And the second is that growth in the years that followed left a lot to be desired. Why is this important? Because it puts that 12% boom into context. Normally, that fantastic news, but in Venezuela, this is much more of a rebound than real economic growth. But don't get us wrong, the Venezuelan economy was so broken that it wasn't even rebounding after the COVID crisis. The fact that GDP is now growing more strongly is fantastic news, but it doesn't mean, not by a long shot, that we're already seeing a structural shift in the economy that will generate much more growth in the future. That said, we can't claim there are no signs of structural change, either. Let me give you a very simple, but very significant example, the airlines.

[00:04:36]In the early 2000s, Venezuela's airports received about 360 international flights each week. But after years of taxes, regulations, currency controls, and unpaid debts, that number has plummeted to 90. However, in recent weeks, at least six major companies have announced their return to the country, including Air Europa, Avianca, LATAM Airlines, and even American Airlines, which plans to launch a Miami-Caracas route starting April 30th. And trust me, establishing these routes is no cheap feat. It requires a considerable investment in logistics, and that's a sign that these companies are committed to operating in the country for the long term. And that in itself is a significant economic boost. And yes, sure, this is just a small example, but no economy changes radically in two or three months. Now, if you want some more general advice, we have that, too. There's a huge difference between having a $1,000 and having a piece of paper from someone promising to give you $1,000, especially if that someone is Nicolás Maduro. These pieces of papers are debt bonds. But of course, if the issuer doesn't want to or can't pay them, they're worthless.

[00:05:40]That's why when the Americans took Maduro to a federal prison, the likelihood that the next government would pay the bond skyrocketed, and we see that perfectly reflected in their price. And I know what many of you are thinking. Well, but this just means that the United States is going to force Venezuela to pay its debts no matter what, even if that ruins the economy.

[00:05:58]Well, maybe you're right, but do you know what? Bonds from many were also considered dead have come back to life.

[00:06:04]Take the case of Elecar, Electricidad de Caracas, which has skyrocketed 98%.

[00:06:11]>> [music] >> In other words, it does seem like there's more hope for the future, and that word is crucial, future, because the present remains very, very complicated. Venezuela's 600% inflation undercuts Trump's boast of revival.

[00:06:26]Inflation is high, the bolívar is losing value, and people are still earning poverty wages. According to a survey, eight out of 10 Venezuelans have not seen an improvement in their economic situation since Maduro's capture. The fact is that oil production fell by 20% in January, and without these exports, Venezuela has no way to obtain dollars to defend its currency. The result, you've already seen it, 600% inflation.

[00:06:49]The silver lining is that, according to the same survey, 80% of Venezuelans also believe things will improve by the end of the year. And private consulting firms estimate that inflation will close out 2026 at around 150%, which is outrageous, but also much lower than it is now. And if we're talking about reasons for optimism, we absolutely have to mention oil, especially given how valuable it has become due to the blockade of the Strait of Hormuz.

[00:07:17]In this sense, the war in Iran has been a true lifeline for the Venezuelan economy. It's estimated that revenues in 2026 could be 75% higher than in 2025, exceeding $22 billion, a figure not seen since 2018. Surely, it comes as no surprise that Delcy Rodríguez's first major reform was the Hydrocarbons Law, which gave the private sector more leeway to exploit the country's oil fields. And in exchange, Uncle Sam lifted many of the sanctions that were suffocating the sector. This explains news stories like this one.

[00:07:46]Repsol aims to triple Venezuelan oil output after securing US permit.

[00:07:51]According to the Spanish company, Venezuela owes it 4.55 billion euros.

[00:07:56]The latest developments will allow payments for the gas supply to resume.

[00:07:59]Keeping in mind, as we told you a while back on this channel, it would take a decade and hundreds of billions of dollars for Venezuela to return to producing the 3 million barrels per day it produced during its golden age. In Maracaibo, one of the regions attracting the most investment right now, only one in four oil wells is operational. And the few wells that are functional are being operated with very old machinery and techniques that ceased to be cutting edge decades ago. Canada has viscous, acidic, and very heavy oil, just like Venezuela's. But while Canadians inject heat to make it more liquid, Venezuela doesn't even have the energy infrastructure needed to generate that heat. Even so, Venezuela doesn't have to produce more to make more money from oil. And we're not saying this because the war in Iran has sent prices skyrocketing. We say this because until now, PDVSA was so heavily sanctioned that it had no choice but to sell its crude oil at a loss on the black market, mainly to China. It's estimated that Xi Jinping was buying this oil for $52 per barrel, while its official price was around $60.

[00:08:59]But now the US is lifting these sanctions, and Venezuela can once again sell its crude oil at the international price. And so, black gold is flowing to countries that had not traded with Venezuela for a long time, at least not officially. The most striking case is India, which had practically cut off imports since 2021, but is now importing about 12 million barrels a month. And the US, which wasn't importing anything, either, was buying 230,000 barrels in early March, and 430,000 by the middle of the same month. All of this is good news. Now, don't you see that something doesn't quite add up? Exactly. We've talked a lot about oil, but what about the rest of the economy? If Venezuela wants to become a developed country again, it can't rely solely on its natural resources. And here, I have to give some more bad news. Both US politicians and Delcy Rodríguez's government have their eyes fixed on this sector, on mining and oil. [music] As for the rest of the economy, well, we'll see how it goes. Everything in its own time. In a way, it makes sense. The primary sector is the fastest way to give the economy an adrenaline boost, and it's also true that right now the number one priority is to bring down inflation, and that requires dollars.

[00:10:04]Without macroeconomic stability, reforming other sectors doesn't make much sense. What's more, Venezuela not only has plenty of oil, but also gas and is very rich in key minerals such as coltan, bauxite, and gold. This is why, following on from the hydrocarbons law, the mining law has received the most attention. Venezuela passes mining reform laws as it seeks private investment. The law, approved unanimously by the government-controlled National Assembly, increases legal guarantees for investors while allowing for independent arbitration in disputes.

[00:10:34]However, mining in Venezuela faces two major problems.

[00:10:41]The first is that many of these mines are controlled by criminal gangs, sometimes with the support of the military. So, exploiting them will be a challenge that goes far beyond the economy. And watch out, because the second problem is even more significant.

[00:10:53]Mining is a ridiculously small sector.

[00:10:56]On this channel, we've told you many times that there's a huge difference between strategic minerals and valuable minerals. If Western countries don't mine or refine rare earths, it's first and foremost because they're worth so little that they aren't profitable.

[00:11:10]Okay, here's a question. Oil accounts for 25% of Venezuela's GDP. What percentage do you think mining accounts for? 15? 10? 5? Well, no. In reality, it doesn't even reach 1%. Chavismo has made the entire Venezuelan economy revolve around one thing, oil. It's gone from a smaller share of the economy than manufacturing in the 1990s to being four times as significant. And all of this boils down to one thing. For industry and the service sector to flourish in Venezuela, the first and foremost priority is to stabilize the macroeconomy. But right now, the only sector large enough to achieve this is oil. Or to put it another way, even if mining or even a large part of industry were to magically double its production overnight, its impact on the economy would be very small. So, we come back to what we said before. The solution for Venezuela absolutely depends on fixing its oil sector. Of course, reforms can't stop there, but it's the best place to start.

[00:12:05]You see, even if the new government were to copy Switzerland's regulations, the Venezuelan industry still wouldn't be able to take off. And to understand why, we need to take a look at how companies go about obtaining something as basic as dollars to import raw materials or new machinery. Dollar scarcity has also distorted the country's newly implemented exchange system. The auction-based program, introduced shortly after Maduro's capture, distributes proceeds from dollar sales through private banks, which then sell the currency to companies. With that in mind, inflation is likely to stay elevated in the near term until the dollar supply rises and the FX rates converge more closely.

[00:12:40]>> After Maduro's capture, Delcy Rodríguez's government launched a new monetary scheme in collaboration with the US. The idea is for the Central Bank to auction off the dollars it obtains from oil sales. Banks bid on that money and then sell it to companies that want to exchange their bolívars. The problem, right now, there are three exchange rates in the country, the one set by the Central Bank, the one from the bank's auction, and the parallel rate on the street. This means that a few companies are scrambling to get dollars for 500 bolívars, while most have to buy them at 600. The result, many companies are waiting in line, hoping for their chance to get these cheap dollars instead of buying dollars today at the parallel rate and starting to import goods from abroad to invest. What's more, these auctions aren't entirely transparent, and they're very, very slow. And although there are other mechanisms for obtaining dollars, the Central Bank is rejecting 80% of the requests. Now, none of these problems are entirely new in Venezuela. The system is similar to the one that has been in place since 2019, to name just one example. But the important thing is that this new stopgap measure, which is being implemented with the collaboration of the US, is not fulfilling its primary role, allowing Venezuelan companies to access the global market to import and invest.

[00:13:52]This is a major problem because a broken financial system also makes it much harder to repatriate the money Venezuelans have abroad. There are no recent reliable figures, but in 2018, the amount exceeded 150 billion dollars, more than enough to stabilize the macroeconomy if all that money were to return to the country. Basically, we're talking about bank accounts and debt bonds that many Venezuelans have been keeping in other countries out of fear that they wouldn't be able to use them due to international sanctions or outright expropriation by the Chavista regime. Visual Economic Community, we told you a little white lie earlier. As well as oil, Venezuela has another major source of potential income, the diaspora. We just showed you the assets that Venezuelans keep outside their country, but there are also tons of Venezuelans scattered all over the world. Let's not forget that this country has experienced one of the largest exoduses in history, with 8 million people having left the country in recent years. These Venezuelans send between four and five billion dollars back to the country in the form of remittances. But most importantly, they've been saving money in their host countries. And if they return with that money, the country's economic situation could take a 180° turn.

[00:14:59]But even a small surge in return migration could have a powerful economic impact. If just 10% of the diaspora returned with modest capital, say $50,000 per household, that alone would represent tens of billions of dollars flowing back into the economy. Forget about oil. What would happen to all these people is probably the most important question of the moment, and not just because of the money. Venezuela has suffered a brutal loss of human capital. Its best engineers, the ones who could revive PDVSA or create new cutting-edge companies, have left for the US or Canada. Clearly, there are also two major problems here.

[00:15:36]The first is obvious. Many of these workers have already settled down and wouldn't return even if they could.

[00:15:42]What's more, a PDVSA engineer earns about $500 a month, while someone in a similar position in Canada's oil fields earns at least 10,000 Canadian dollars a month. And the other is that the people who have fled because of Nicolás Maduro probably don't feel comfortable with Delcy Rodríguez and her clique in power, either. Ironically, the people who could have the greatest impact on the country's economy and politics probably won't return en masse, precisely because of how the situation stands right now.

[00:16:08]Still, we want to end on an optimistic note. 80% of Venezuelans believe the economy will improve significantly by the end of the year, and we think so, too. Without sanctions and with some help from US companies and the US government, Venezuela should be able to export enough to bring in dollars and stabilize its economy. Of course, there's still a lot of work to be done, but this would already be a huge step forward for a country that has been so battered. In any case, now that we've come this far, it's your turn. Will Venezuela really grow by 12% this year?

[00:16:38]Do you think the government is right to focus so much on oil, or should it start diversifying the economy right away? Do you think most Venezuelan exiles will return? You can leave your answers in the comments. Don't forget that here on Visual Economic, we release new videos every week, so subscribe if you haven't already, so you don't miss any of our upcoming episodes. If you liked this video, hit like, and I'll see you in the next one. Take care until next time.