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Venezuela - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises


Capital:: Caracas
Area:: 912 km2
Total Population:: 29.955
Annual growth rate:: 2.00%
Density:: 34.00/km2
Urban population:: 94%
Population of Caracas (3.478), Maracaibo (1.868), Valencia (1.750), Barquisimeto (1.500), Maracay (1.125), Ciudad Guayana (1.000)
Official language: Spanish.
Other languages spoken: English, French, German and Portuguese are also spoken by some sections of the population.
Business language: Even if English is used, it is still strongly advisable to speak Spanish. Most of the population does not speak English and all official documents must be drawn up in Spanish.
Ethnic Origins:: The origins of the population are Spanish, Portuguese, Italian, German, African and native. Population of mixed ethnic origins: 67%, white population: 21%, population of African origin: 10%, native population: 2%.
Beliefs: Catholics 96%, Protestants 2%, Others 2%.
Telephone codes:
To make a call from: 0
To make a call to: +58
Internet suffix:: .ve
Type of State::
Bolivarian Republic. Federal state based on parliamentary democracy.
Type of economy::
Upper-middle-income economy
Economy highly dependent on fluctuating oil prices.

Economic overview

With the largest oil reserves in the world (297 billion barrels), Venezuela is, in 2014, the fifth largest Latin-American economy, after Brazil, Mexico, Argentina and Colombia. It depends excessively on the fluctuations in oil prices. Venezuela's economy was strongly affected by the global economic crisis, the growth of its GDP contracted between 2008 and 2010 before coming back in 2011 (+4.2%) and 2012 (+5.6%) (IMF 2014). In 2013 growth has reached only 1% and the forecast for 2014 is 1.7%.

The Venezuelan growth model rests on two pillars: domestic consumption (over 72% of GDP) and high public spending (estimated at 35% of the GDP for 2013), oriented towards redistributing the revenues from oil in favor of the least privileged population groups. Poverty has sharply decreased in the recent time, from 54% to 23,4% in 2013.

In this context, the priority of the government is to get Venezuela out of the crisis. Facing a high increase in inflation (21% in 2012 and around 38% in 2013 according to the IMF), the government introduced a new exchange system (the third), "Sicad 2", an alternative system of exchange of currencies that allows holders of bonds in bolivar (VEF) to convert them into dollars at a certain rate. This is supposed to bring closer the official dollar exchange rate (1 USD = 6.3 VEF), with its real value on the black market (1 USD = 70 VEF). The government must also deal with the conjunction of two major sectoral crises: lack of water in the country and the production shortfall in the electricity sector. The debt owed to China, who became a major trading partner, has risen sharply in recent years

The economic model of the Venezuelan economy combines state-managed oil rent economy, mass consumption and increasing socialization of the means of production. The country's wealth is unevenly distributed within the population. The unemployment rate reached 7.8% in 2013 after 8% in 2012. While the country lives on its oil revenues, the exploding cost of living has huge social consequences and Venezuela is currently in a state of great instability, reinforced by the death of President Chavez.

Main industries

The agricultural sector of Venezuela contributes to 3.7% of the GDP and employs around 7% of the active population. The main agricultural products of the country are: corn, soya, sugar cane, rice, cotton, bananas, vegetables, coffee, beef and pork meats, milk, eggs and fish. Venezuela benefits from important natural resources: oil, gas, gold and silver mines, bauxite and diamonds.

According to the OPEC, proven oil reserves of the country reach 296.50 billion barrels, which makes it a world leader ahead of Saudi Arabia.

The industrial sector represents 35.5% of the GDP and employs around 22% of the active population. The main industrial activities are oil (controlled by a state's company, oil represents the first natural wealth source of the country), construction material, foodstuffs, textile, iron, steel, aluminum and motor-car assembly.

The services sector has represented 60.8% of the GDP in 2013 and employed 71% of the active population.

Foreign trade overview

Foreign trade in Venezuela represents about one third of the GDP.  The country is trying, above all, to improve and to increase its trade relations with the Latin American zone, the EU and China. Venezuela officially joined the Mercosur on July 31, 2012. With the entry of Venezuela, Mercosur has become the fourth trading bloc after the European Union, NAFTA and ASEAN. However, the United States remains the first buyer of Venezuelan oil and the largest economic and trading partner. It pays for its purchases at market prices, which represents Venezuela's largest source of cash.

Venezuela exports oil, iron bauxite and aluminum, agricultural products, semi-manufacturing products, vehicles and chemical products. Its main clients are:  the United States (over 40% of total export in 2013), China (from 8% to 20% in two years) and India. The country imports manufactured and luxury products, machinery, transportation equipment, construction material and pharmaceutical products. Venezuela's main suppliers are: the United States (25% of imports in 2013), China, the EU and Brazil.

The trade balance of Venezuela is structurally very positive due to its richness in oil. It reflects the significant share of oil in the country's economy, despite the increasing difficulties faced by this sector, following those of the entire business environment in the country. In 2013, oil exports (over 12% of GDP) have increased. They represented 96.3% of export revenues and 40% of the Federal budget. A growing part of oil revenues are orientated towards the financing of social projects and policies (in domestic public expenditure and in support of allies abroad) at the expense of production investment. Non-oil exports, which accounted for 35% of the total in the 1990s, have been considerably reduced (less than 4% in 2013), a consequence of the weakening of the productive apparatus and of an increased reliance on oil revenues.


In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.

Despite the attractiveness of the country due to its godsend oil, the large size of its domestic market and the richness of its natural resources, the inflows of FDI in Venezuela have been smaller in the last few years. The economic and political crisis set off by the international financial crisis of 2008-2009 has provoked a significant back-flow of FDI between 2009 and 2011. The uncertain climate born from the "Bolivarian" reforms (infringement of private property rights, foreign currency control, increasing regulations, nationalizations, etc.), Chavez's anti-American speech and the ineffectiveness of the port system are some of the many hindrances to investment.

Venezuela is combining regional and revolutionary politics, without closing its doors to foreign investment, which it needs badly. Still, the "Bolivian" socialism pursued by very interventionist the government hinders the increase of FDI flows. Nevertheless, FDI reached over 3,2 billion USD in 2013.

Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).

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