Venezuela shows signs of incipient recovery in 1st half of 2022

By Hector Pereira

Caracas, Jul 7 (EFE).- Signs of an incipient economic recovery in Venezuela are apparent in the country’s GDP growth and lower inflation rate relative to previous periods, although social inequality and the precarious state of basic services remain persistent problems.

The recently improved macroeconomic situation in that oil-rich nation, whose economy had shrunk more than 70 percent over a 10-year span, is spurring higher consumer spending and the incessant opening of new business ventures, particularly in Caracas.

Millions of people on the outskirts of that capital, however, continue to live in poverty and occasionally even are unable to put food on the table.

Below are some of the keys to understanding the unequal recovery of a country trying to emerge from a years-long crisis.

PRICES AND MONEY

Inflation in the first half of 2022 came in at 53.8 percent, or one-sixth the rate registered in January-June of last year, according to the Venezuelan Finance Observatory, an independent body staffed with economic experts.

The rate of depreciation of the bolivar relative to the dollar, meanwhile, slowed to 17 percent in the first half of the year, compared to a 50 percent drop in value during the same period of 2021, according to Venezuelan Central Bank reports.

Experts say those results are attributable, among other reasons, to the government’s efforts to reduce demand for dollars.

That has been achieved by limiting access to bolivars – necessary to purchase hard currency – through both a reduction in public spending and tight restrictions on bank loans.

OIL AND EXPORTS

Output in the oil industry, Venezuela’s main source of hard currency, has come in at a range of between 735,000 barrels per day and 775,000 bpd in recent months, a level is that is far from leftist President Nicolas Maduro’s goal of producing 2 million bpd by the end of 2022 and exporting 20 percent of total output.

WAGE INCREASE

The minimum wage is currently set at 130 bolivars after being raised by 1,705 percent in March, an increase that has provided a boost in income to nearly 10 million people, most of them manual laborers and retirees.

That wage hike initially amounted to $28 a month but now is equivalent to around $23.40 a month, a quantity still woefully insufficient to meet a typical household’s basic needs.

WATER AND ELECTRICITY

The economic recovery also is hampered by near-daily electricity service interruptions throughout most of the country, according to independent surveys of those affected by the outages.

Deficient Internet connections and lack of water service also are constant problems that have left more than half of the population dissatisfied with public services.

PRESENT AND FUTURE

The Economic Commission for Latin America and the Caribbean estimates that Venezuela’s economy will expand by 5 percent this year, a growth rate that would be tops for all of South America.