Do you think the grey/informal economy is an important part to Venezuela’s recovery? Because I think I saw that in 2022 around 1/5 of Venezuela’s GDP right now comes from black market trade. And actually in the past two years Venezuela’s GDP has actually increased overall I believe which is nice.
For me I think the cause of the economic crisis is a mix between the long term effects of Chavez’s economic policies, but also because of the short term effects of the US embargo.
Chavez’s management of the Venezuelan economy led to an over dependence on oil exports, which was fine while the value of oil remained high; but in the 2008 recession, demand for Venezuelan oil from China fell by a lot, meaning the value fell too, sending the economy into a slowdown. The long term impact of this was that the Venezuelan economy was already slowing down before the US embargo even happened.
One could say that Chavez’s policies had already weakened the Venezuelan economy a lot, but the US embargo was the event that was the trigger for the current catastrophe. After the embargo the Venezuelan economy nearly tanked, and its GDP fell by around a third in only a year. Lifting the US embargo would lead to the best outcome for not only Venezuela, as it would allow oil exports to resume and drive economic growth, but also it would be preferable to the US, since the US needs to replace their Russian oil and gas with something else.
Please correct me if anything I said seems wrong, I have only researched this topic; you have lived it and therefore would have a better understanding of the situation on the ground.
McGuv19 t1_j2en9d6 wrote
Reply to comment by reyxe in The Venezuelan opposition on Friday dissolved the "interim government" led by Juan Guaido, once the popular and internationally recognized face of the drive to oust leftist leader Nicolas Maduro by DoremusJessup
Do you think the grey/informal economy is an important part to Venezuela’s recovery? Because I think I saw that in 2022 around 1/5 of Venezuela’s GDP right now comes from black market trade. And actually in the past two years Venezuela’s GDP has actually increased overall I believe which is nice.
For me I think the cause of the economic crisis is a mix between the long term effects of Chavez’s economic policies, but also because of the short term effects of the US embargo.
Chavez’s management of the Venezuelan economy led to an over dependence on oil exports, which was fine while the value of oil remained high; but in the 2008 recession, demand for Venezuelan oil from China fell by a lot, meaning the value fell too, sending the economy into a slowdown. The long term impact of this was that the Venezuelan economy was already slowing down before the US embargo even happened.
One could say that Chavez’s policies had already weakened the Venezuelan economy a lot, but the US embargo was the event that was the trigger for the current catastrophe. After the embargo the Venezuelan economy nearly tanked, and its GDP fell by around a third in only a year. Lifting the US embargo would lead to the best outcome for not only Venezuela, as it would allow oil exports to resume and drive economic growth, but also it would be preferable to the US, since the US needs to replace their Russian oil and gas with something else.
Please correct me if anything I said seems wrong, I have only researched this topic; you have lived it and therefore would have a better understanding of the situation on the ground.