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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

January 26, 2022

Is Venezuela’s Economy Making a Comeback?

Venezuela’s economy likely rebounded with 4 percent growth last year, President Nicolás Maduro said recently. // File Photo: Venezuelan Government.

Q

  • Venezuela’s economy grew 7.6 percent in the third quarter of last year, and likely grew more than 4 percent in 2021, President Nicolás Maduro said recently. The country is showing signs of economic recovery, though analysts say the real figures are likely not as high as Maduro claims. Venezuela also broke a four-year stretch of hyperinflation as Maduro’s government slowed the printing of money and local use of the U.S. dollar grew in popularity. What is fueling the country’s economic growth, and how likely is it to last? What sectors are driving growth the most, and how did Venezuela break free of its chronic hyperinflation? What are the real growth figures, and how will this trend affect Maduro’s grip on power?

A

Vanessa Neumann, CEO of Asymmetrica and former Juan Guaidó-appointed Venezuelan ambassador to the United Kingdom: “In December 2017, as Venezuela was heading into one million percent inflation, I gave a speech at the Institute of World Politics in Washington that included a push for dollarization as a matter of policy to control inflation. It was controversial: dollarization would mean the end of sovereign monetary policy, taking devaluation off the table as a tool to deal with any crisis, such as drops in revenue or restricted access to external debt. The resulting credit crisis would have to be dealt with. But, as I argued, as foreign exchange risk disappeared, Venezuelans would get water, electricity, medicines, food and telecommunications—all key to improving Venezuelans’ lives. Real dollarization stops populist policies; it also makes domestic corruption an international crime punishable in U.S. courts …”

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The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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