Venezuela’s economic policy is based entirely on oil production that pays for the state’s social programs and the country’s growing imports. Price controls and currency controls have undermined and reduced domestic production and caused many international companies to leave the country. After the sharp oil price collapse since 2013, the economy has been in a deep crisis with falling GDP, rapidly rising inflation and commodity shortages. People have had to queue for hours to buy food and hygiene items.
The 2015 continuing price race for oil has further exacerbated the economic crisis. In the ensuing years, oil prices have turned upward, but the economic crisis in the country has continued.
The government has tried to gain control of the situation by introducing different types of rationing, but failed to address the problems. The central bank has stopped publishing official government statistics, but calculations indicate that inflation reached up to 200 percent in 2015. Inflation has continued to rise and in 2017 the country had so-called hyperinflation with an annual inflation of just over 10,000 percent.
Oil revenues account for 90 percent of the country’s export revenues and more than 50 percent of the state budget.
Many attempts have been made to use oil revenues to build up a domestic industry and reduce dependence on imports, but without much success. In recent years, in accordance with Hugo Chávez’s vision of socialism of the 21st century, the state has taken control of several basic industries such as cement, steel, electricity, telecom and food.
Until the discovery of oil, Venezuela was an agricultural country with significant exports of coffee and cocoa. However, a very small part of the land is suitable for agriculture, and today the cultivated land constitutes just over 4 percent of the land area. In 2001, a law was introduced that gives the state the right to confiscate privately owned land that is not used. By increasing the proportion of land in production, it was hoped to reduce dependence on food imports and contribute to rural development. The law has resulted in more than 1 million hectares of land being distributed to farm workers, but agricultural production has not increased.
The main crop is sugar cane, but also bananas, corn and rice are grown. Coffee is the most important export commodity from agriculture, but rice and cocoa are also exported.
About 20 percent of the land area consists of pasture, and livestock farming is a traditional industry in the plains, where it is still of great importance.
Vegetable cultivation for the big cities has increased in importance in recent years.
Venezuela is a very resource-rich country, and its main natural resource is oil and natural gas. Oil deposits were discovered in the 1910s in the Maracaibo area, and by the end of the 1920s Venezuela was the world’s largest oil exporter.
The country was severely affected by the depression in the 1930s, but during the first post-war period Venezuela was the world’s second largest oil producer, after the United States. Oil is currently extracted in three regions of the country, of which the Maracaibo fields in the northwest are the oldest and most famous. Large amounts of oil are also believed to be found in the Guyanese basin and the El Tigre area in the eastern part of the country.
Venezuela also has large deposits of iron ore, gold and diamonds, mainly in the Amazon region, as well as coal, bauxite, nickel phosphate, scheelite (tungsten), manganese, zinc and copper.
By far the largest industrial branch is the oil industry. At the same time, it is the least labor-intensive and employs only 1 percent of the labor force. Venezuela is one of the founders of the oil countries’ cooperative organization OPEC and was for long its only Latin American member.
After the oil extraction, the steel industry is the most important sector, and there is also income-generating production of aluminum, chemicals, vehicles and consumer and capital goods. The heavy industry is located in the areas around the cities of Ciudad Guayana and Valencia.
By far, the largest export product is oil, which accounts for 90 percent of revenue, but bauxite and aluminum also generate high income, as do some industrial products. The most important import goods are agricultural products, machinery and chemicals.
- COUNTRYAAH: Find major trading partners of Venezuela, including major exports and major imports with latest trade value and market share as well as growth rate.
The United States is the largest trading partner, followed by India and China.
Tourism and gastronomy
Venezuela was visited in 2015 by just under 800,000 tourists. A number that could have been greater if not political and social concern deterred many visitors.
The capital of Caracas is strongly characterized by the expansion of recent decades, which has been expressed in an extensive high-rise building with a partly interesting architecture, but also led to an extensive street crime. Sabana Grande pedestrian street and the Parque Central mall offer an overwhelming range of shops and restaurants. In the modern districts there are also interesting museums: the Art Museum (for older art) and the Modern Museum not only have Venezuelan and Latin American art, but also a selection of European art with few counterparts in South America. Despite all modern buildings, a town center from the Spanish era has been preserved around the Plaza Bolívar with town halls and three churches from the 17th century. The driven Bolivar cult meets in Cuadra Bolívar, the family’s summer mansion, in the rebuilt birth house and in Panteón Nacional.
- According to AllCityPopulation, the capital city of Venezuela is Caracas with a population of 3,400,000 (with suburbs, estimate 2013). Other major cities include Maracaibo with a population of 2,200,000, Maracay with a population of 1,700,000, Valencia with a population of 1,400,000 (estimate 2013).
To the west are other cities with colonial city centers, nice green areas and beautiful surroundings, eg. Mérida, Valencia and Maracay. The island of Margarita in the Caribbean is important for bathing tourism with miles of beaches and a lush interior. However, the areas of greatest interest in eastern and southern Venezuela have the greatest interest. Here Llanos, the large, flat and undulating plain, spreads out and here lies the more than two hundred year old settler town Ciudad Bolívar on the river Orinoco and the jungle area towards the border with Brazil. In the highlands of Guyana lies the large national park Canaima, which attracts tourists with its dense forests and unspoilt rivers, interesting wildlife and the world’s highest waterfall, the Angelfallen.
The food in Venezuela is generally spiced milder than in the rest of South America, and many mild fish dishes with coconut milk are on the menus, such as pargo (red snapper). Beef, red or black beans, corn and rice are the most common ingredients. Every day and for all dishes, corn buns are eaten. Pabellón is a stew where beef and rice are mixed with bananas and black beans. Another common stew, sancocho, may also contain meat, feed or fish. Grilled meat is often served with the avocado sauce guasacaca. Papaya is included in many desserts but is also served for meat and fish. Shrimp, oysters and mussels are served along the coast. Cachapas are soft corn pancakes, often rolled around cheese filling. For Christmas you make lawshallacas, corn pancakes filled with meat or fish, raisins, eggs, olives and sweet almonds and cooked in banana leaves. A popular dessert is huevos chimbos, a very sweet egg yolk dish.