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The daring raid by US special forces to capture the Venezuelan leader Nicolas Maduro and bringing him to the United States to face charges related to drug and arms trafficking could potentially lead to economic relief for average Venezuelans struggling under the regime’s socialist economic policies.
Venezuela’s economy is heavily reliant on oil exports and has seen a sharp downturn over the past decade as mismanagement at the state-owned oil company led to declining production and the rest of the Venezuelan economy grappling with sanctions and socialist policies.
The Venezuelan economy contracted in terms of real gross domestic product (GDP) on an annual basis every year from 2014 to 2020 – including declines of more than 15% in 2016, 2017 and 2018; as well as declines of 27% or more in 2019 and 2020, according to International Monetary Fund data.
Jorge Jraissati, president of the Economic Inclusion Group, told FOX Business that this dynamic has created very difficult economic circumstances for average Venezuelans and that “average wages in Venezuela are extremely low in real terms.” The official minimum wage remains frozen at 130 bolivars per month, which equates to less than $1 per month at common exchange rates. »
Captured Venezuelan dictator Maduro pleads not guilty before judge cuts blast
Venezuela’s economy has weakened under the Maduro regime due to a decline in oil production. (Javier Campos/NurPhoto/Getty Images)
“Even when combined with government bonuses such as food or hardship allowances, many public sector workers only earn around $160 per month, while private sector employees often earn between $230 and $240 per month on average,” Jraissati said.
“Household surveys also show that the average family income is around $200 per month in many areas,” he added. “These levels are well below the cost of a commodity food basket and essential products. This is why 70% of people live in poverty. »
Jraissati pointed out that Venezuela’s economic woes in recent decades stand in stark contrast to the economic dynamism the country experienced for much of the last century, before Hugo Chávez’s regime rose to power in 1998 and settled the country. socialist economic policies over the following decade.
AFTER MADURO, VENEZUELA FACED DIFFICULT CHOICES TO REBUILD ITS OUTLINED ECONOMY
Average Venezuelans have faced endemic inflation and poverty amid the economic decline of recent decades. (Federico Parra/AFP via Getty Images)
“For much of the 20th century, Venezuela was not a poor country,” he said. “Between 1920 and 1980, it was the fastest growing economy in the world, with GDP per capita growing at an average of 6.4% per year, placing it among the 20 richest nations in the world.”
“The standard of living reflects this reality. Broad access to consumer goods, rising wages and a sustained expansion of the middle class were the norm. This trajectory was reversed by socialist economic policies,” Jraissti said.
Chávez died in 2013 and was replaced by Maduro, who consolidated his power to establish a dictatorship through fraudulent and fraudulent means. undemocratic elections.
MADURO CAPTURE PUTS VENEZUELAN ECONOMY DEPENDENT ON CUBA OIL AT RISK
Venezuela’s oil production has fallen due to the Maduro regime’s mismanagement of the state-owned oil company. (Bloomberg/Getty Images)
Dire economic conditions have fueled an exodus of Venezuelans over the past decade, galloping hyperinflation leads to shortages of basic necessities like food and medicine. Inflation peaked at more than 130,000% in 2018, but slowed to 190% from 2023, according to the central bank.
“Since 2013, Venezuela has lost approximately 70 percent of its GDP, constituting the largest peacetime economic collapse in the modern history of the Western Hemisphere,” Jraissati said. “Hyperinflation, expropriations, price controls and currency controls have destroyed the production capacity and purchasing power of households.”
Venezuela’s oil industry has seen a significant decline over the past 20 years, and Jraissati added that a broader economic collapse “occurred despite an extraordinary windfall” from oil exports.
“Between 2003 and 2013, the country received almost $1 trillion in oil revenues,” he said. “Today, more than 80% of Venezuelans live in poverty, and extreme poverty affects about half of the population. Not counting the 8 million people who have left.”
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Data from the Organization of the Petroleum Exporting Countries (OPEC) shows that Venezuelan crude oil production was consistently above 2 million barrels per day from 2005 to 2016, when it began a sharp decline – falling below 1.5 million barrels in 2018 and below 1 million barrels in 2019.
