Mision Verdad: Three Economic Facts Ahead of the July 28 Venezuela Elections

President Nicolás Maduro heads the National Council of Productive Economy

https://misionverdad.com/venezuela/tres-datos-economicos-de-cara-las-elecciones-del-28-de-julio

Citizens’ assessment of a government’s performance is largely determined by the direct impact their personal and family economic situation experiences in a given period.

Indicators such as inflation, unemployment, purchasing power and economic growth are used to evaluate a government’s economic management, reflecting how the economy affects people’s daily lives.

In the Venezuelan electoral context, with the imminent presidential elections of July 28, the national economy becomes a contested terrain, where the manipulation of figures and the invisibility of economic improvements are once again on the country’s political agenda.

The complexity of the Venezuelan situation, marked by nine years of sanctions that have deeply impacted the country’s economic foundations, makes any assessment of performance even more problematic and controversial. This reality cannot be ignored when analysing economic figures and trends, as sanctions have created an exceptionally challenging environment for national development.

Thus, it would not be fair to evaluate two students on equal terms in an exam if one had his hands tied and his eyes blindfolded, while the other was free to use his physical and intellectual abilities. This analogy clearly illustrates the situation in Venezuela, where sanctions have imposed severe restrictions on economic development, while other countries do not face such limitations.

However, as the country does not stop and beyond the blackmail and extortion that this sanctions regime represents against the country, since 2018 the Economic Recovery, Growth and Prosperity Program has been implemented, which has allowed not only to face the restrictive external context that the sanctions represent but to resume the stability and growth that it shows today.

Against the backdrop of the undeniable success of the economic recovery program, we present three unquestionable achievements that the government of Nicolás Maduro is showing in this area in view of the presidential elections on July 28 and that allow us to project scenarios of growth, accompanied by social well-being.

ECONOMIC GROWTH

Executive Vice President Delcy Rodríguez has announced that Venezuela has maintained 11 consecutive quarters of economic growth. She also mentioned that the first quarter of 2024 already shows a growth of 7%, which anticipates a year-end with a more robust and dynamic outlook.

While numbers are important, their true meaning is revealed when we understand their impact on the daily lives of Venezuelans. An increase in the production of goods and services not only implies greater wealth and social well-being, but also reflects greater dynamism in the country’s economy.

The growth figures are accompanied  by others  that allow us to better understand what is happening in Venezuela. For example, from 2020 to 2024, the number of businesses in Venezuela rose to more than 76,508, and between 2018 and 2024, 62,607 brands of all types of products came onto the market. More businesses and active commercial establishments are observed in Venezuela.

But that is not all. Projections from international financial organizations and institutions such as ECLAC and the IMF, as well as those made by the national government itself, ensure that growth will continue in 2024 and could be around 8%.

INFLATION CONTROL

Inflation refers to a general and sustained increase in the prices of goods and services in a country over a given period. When inflation is high, what workers spend during one month, for example, on food, transportation and services, will not be the same as what they will spend in the next 30 days, and so the quantity or quality of the products they purchase decreases.

Inflation levels considered high reflect the loss of purchasing power of workers, not to mention that they discourage productive investment, put the brakes on economic growth and tend to generate unemployment.

In Venezuela we are experiencing episodes of high and very high inflation (hyperinflation) right at the moments of greatest political and economic tension as a result of the sanctions imposed. However, for some years now there has been a sustained and continuous decrease in these levels that allows us to speak of a control of the variable.

Thus, in May 2024, Venezuela reached a historic milestone by recording the lowest inflation rate in two decades, standing at just 1.5%. This achievement represents significant progress in the fight against inflation, which has been one of the country’s main concerns for years.

Accumulated inflation so far this year remains at 7.8%, a figure considerably lower than that observed in previous years. Projections for the end of 2024 are optimistic, with estimates pointing to inflation below 50%.

And while an inflation rate above 10% remains problematic, the truth is that reaching those levels in the context of sanctions and blockade has become a true feat and a demonstration of the joint effort that the people, government and private initiative have been making in order to control inflation.

EXCHANGE RATE STABILITY

The ghost of daily devaluation has been hanging over the Venezuelan economy for several years, with the implications that such fluctuations have on people’s daily lives, since in economies like Venezuela’s —especially in previous years— if the exchange rate increases, products in general —imported or not— also rise in price, which affects personal and family budgets.

Starting in 2018, a new exchange rate system began to be established based on two realities assumed following the economic sanctions: first, that the State does not have the financial means to sustain an exchange rate on its own (bolivar-dollar ratio), and second, that the private sector needs to actively participate in order to contribute foreign currency to the exchange rate system that was emerging at that time.

The new matrix that was created is solid, sustainable, independent of oil revenues, which allows strengthening economic stability and keeping inflation under control. The public (25%) and private (75%) flow of foreign currency to the exchange market has allowed a stability in the bolivar-dollar relationship that had not been seen for some time, whose expression was a variation of only 1.17% between January 1, 2024 and June 25 of this year.

Today, the bolivar is gradually recovering its role not only as a medium of exchange but also as a unit of account that sets prices and as a store of value. And although the road ahead is arduous, there are certain signs that the bolivar is regaining ground  within the Venezuelan monetary ecosystem.

NOTHING IS RANDOM

These achievements are closely related to the substantial improvement that has been observed in the Venezuelan economy and have been a direct consequence of the implementation of the Economic Recovery, Growth and Prosperity Program launched since 2018 by the government of President Nicolás Maduro, which constitutes the programmatic basis of the Plan de la Patria de la 7T 2030, a government proposal for the period 2025-2031.

The fact that the government is showing how successful the recovery program has been is a positive sign in a context of misinformation and the invisibility of achievements that tend to increase during electoral times such as those the country is experiencing.

And although there is still a long way to go to reach pre-sanction levels, when the country had a solid state of social welfare, it is indisputable that there has been a substantial improvement that has had a positive impact on Venezuelan workers and that allows us to ensure that the improvement will continue with the nation’s own efforts.