The Venezuelan economy in 2024, conditioned by internal politics and the US.

The economy of Venezuela, which is expected to close this year in negative, will grow more than 9% in 2024, according to independent estimates, subject to the development of key scenarios for the country, including the internal electoral process for the presidential elections, scheduled for the second semester, and the sanctions policy USAsay experts.

Venezuela is experiencing another episode of uncertainty, awaiting the steps the Government will take towards these elections, to which the international community is paying attention, especially the US, which conditioned the relief of sanctions on the qualification of the candidate. of the main opposition coalition, María Corina Machado, who cannot hold elected office until 2030.

Washington also made the flexibility, which expires in April, in important sectors for the Caribbean country such as the oil sector, subject to the release of the detained Americans. “arbitrarily” In Venezuela.

According to Ecoanalítica estimates, if the suspension of sanctions is maintained until April, the country will register a “significant growth” which will range between a 9% and a 10% regarding 2023, said economist Luis Arturo Bárcenas, head of this firm.

But this scenario, he warned, “it is maintained only if the agreements” are fulfilled.

“If tomorrow the issue of political prisoners is reactivated with more force or there is greater radicalism on the part of the radical wing of the ruling party, in January we can wake up without licenses”said.

Improvement in the country’s income

In 2024, an improvement in the nation’s income from the sale of oil is expected, which can generate an additional income of more than US$ 5,000 million, if the uprising continues until April, and close to US$ 10,000 million, if It extends for the rest of the year, Bárcenas said.

Without sanctions, the country can return to markets like the American one and sell its crude oil “no discounts”.

However, the impact on the economy of these higher incomes will also depend on the use that the Government gives to these resources, which will translate into an improvement in commerce and industry if they are directed to the population to increase consumption, which Bárcenas foresees. be done through direct transfers.

Regarding salaries, the economist does not see an encouraging outlook for workers, especially in the public sector, who demand decent remuneration.

Since March 2022, the Executive has kept salaries and pensions frozen at 130 bolivars, which since then went from almost US$30 at the official exchange rate to US$3.65.

The economist María Moreno, from the Institute of Economic and Social Research (IIES) of the Andrés Bello Catholic University (UCAB), recalled that the Government “has not shown a willingness to correct the minimum wage.”

“The lag in public sector salaries is such that I do not see a correction of this gap being very likely. “Probably (there will be) a symbolic increase to favor his position in 2024 due to the elections,” said.

Prices

November, one monthalways high inflation”according to Bárcenas, recorded an average price increase of one 1.8%a decrease of 4.9 points compared to October, according to the Finance Observatory (OVF), an independent entity.

The expert associates this slowdown with the fall in consumption, which has led companies to “reduce prices in order to try to sell more.”

It foresees that the scenario of single-digit inflation will continue in the first semester, and then begin to register double-digit figures in the second and close the year at an average close to 150%.

Starting in July, with elections in sight, it is likely that government spending will “be more aggressive”which will increase the circulation of bolivars and, therefore, the demand for dollars, with a risk that the price of the currency will increase, which has an impact on goods and services, mostly calculated in the currency North American.

Relief Extension

The economist does not rule out a scenario in which, in April, the US decides to extend the relief of sanctions, which is why he believes that the oil companies are betting, which “are investing in something that takes” longer than the established period.

For this reason, it is considered probable that there “many foreign companies”, even “Americans”, putting pressure on the Joe Biden Administration to extend the uprising, which if it manages to do so for the rest of 2024, the Venezuelan economy can grow more than 12%.

According to the Confederation of Industrialists (Conindustria), the 98% of private entrepreneurs in this sector agree with the relaxation of sanctions.