The study published this October 10, it also warns that the pressure on the exchange rate has increased and that the inflation rate is expected to accelerate in the last quarter of the year
The Venezuela Economic Situation Report prepared by the Andrés Bello Catholic University (UCAB) indicates that the Venezuelan economy is not growing at the same rate as at the beginning of the year. Political uncertainty is one of the factors, in that sense, they warn that if this trend continues the economy could enter recession again in 2025.
“The Venezuelan economy has developed in 2024 in a very different way when comparing the first and second semesters. The first part of the year was characterized by relatively high economic growth. But In the second part, the political-institutional dynamics, generated from the July electoral event, have negatively affected expectationsthe economy entering a new recessionary phase,” reads part of the report published on October 11.
At the beginning of the year, the study indicates that the economy grew at a faster rate due to these factors: the greater stability of the exchange rate, a significant reduction in the inflation rate, an increase in oil production and exports, the expected expansion tax associated with the political-electoral situation and the expectations regarding a transition in the political regime once the July electoral event took place.
The growth rate for 2024 changed downwards. In April of this year it was expected that the economy could grow at a rate of 4.5%; but, at the end of the third quarter the projection has been revised and reduced to 4%.
The institution also warns that the pressure on the exchange rate has increased and that the inflation rate is expected to accelerate in the last quarter of the year. Only this week the dollar in the parallel market closed at 47.55 bolivarsincreasing almost three bolivars in the first week of October alone. The dollar officialfor its part, had the biggest increase this year, closing at Bs 38.88 and rising 3.29% in one day.
The report also points out that political instability and economic uncertainty may increase significantly as the date on which a new presidential term must begin in January 2025 approaches.
“The trend that has been consolidating in this second semester, and what is expected to happen at the beginning of 2025, is a new recession,” the UCAB reiterates.
The analysis indicates that the Central Bank of Venezuela (BCV) has reported an average growth of 8.6% during the first two quarters of 2024, compared to the same periods in 2023. However, they indicate that once the electoral process is over , the level of economic activity has slowed significantly.
“Our estimate is that the GDP ends up growing throughout this year by close to 4%; That is, approximately half of what the economy is supposed to have expanded during the first semester.”
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