History of Venezuela's Economy
The economy of Venezuela majorly depends on the petroleum sector.
Even though it is more of a mixed economy the petroleum sector leads the Venezuela economy and is accountable for approximately one third of the overall GDP, over 50% of the operating revenues from government and about 80% of earnings through export.
The economy of Venezuela was strong in the southern part of America during the year 1950 till the early 1980. Various immigrants were attracted towards Venezuela during that period because of the economy’s continuous growth. However, this economy contracted when the prices of oil collapsed in the 1980’s.
The percentage of amount spent from the GDP by the government in the year 2007 in Venezuela was only 30% which was comparatively less than the other economies like France which had 49% and Sweden which had 52%.
The percentage in terms of people below the poverty line has considerably reduced from 48.1% in the year 2002 to around 30.2% in the year 2006. As the oil prices arose in 2007, Venezuela’s economy also grew by almost 9% in that year. Manufacturing industry had contributed around 17% to the overall GDP in the year 2006 and even today continues to grow further. The agricultural sector contributes around 3% towards the overall GDP.
Inflation in Venezuela:
Venezuela’s inflation was 29.9% in the year 1998 however dropped drastically to 14.4% in the year 2005.The reason behind this was that in 2005 the imported goods were far cheaper than the commodities manufactured in Venezuela. In 2007 it was reported that the inflation in Venezuela rose to 2 year high along with the consumer prices which rose to 18.42% in a year’s time.
Finally around the year 2007 inflation was reported as 16% which was the highest in America and this was because the government had tripled its spending during 2003 to 2007.