The Economic Commission for Latin America and the Caribbean’s (ECLAC) latest report lists Venezuela as the only other country behind Guyana with a high projected gross domestic product (GDP) rate for 2022.
According to ECLAC, Venezuela is set to experience a GDP growth of 10%; Guyana’s GDP growth rate was set at 52%.
A LatinFocus Consensus Forecast conducted by FocusEconomics had projected Venezuela’s economy expanding by 9.8% in 2022, and a further 5.4% in 2023. Those projections line up with an analysis conducted by Bloomberg, indicating that the country’s gross domestic product will see an 8.3% growth this year.
Soaring crude prices have seen Venezuela reaping major benefits for its economy; the country has managed to significantly boost its output; in fact, it has doubled over the past two years.
Data from the Organisation of Petroleum Exporting Countries (OPEC) shows Venezuela produced 710,000 barrels per day (bpd) in May and June, and 661,000 bpd in July.
However, it is still a far way from where Venezuela’s production once stood. The country has the world’s largest proven crude reserves – 298.4 billion – and once pumped a whopping three million bpd.
Meanwhile, ECLAC said that after climbing by 6.5% last year, Latin America and the Caribbean’s combined GDP is projected to grow at a rate of 2.7% on average in 2022, returning to the path of low growth it was following before the pandemic.
South America on the other hand is projected to grow by 2.6% in 2022, compared to 6.9% in 2021. ECLAC said too that the group comprising Central America and Mexico is projected to grow by 2.5%, down from 5.7% in 2021.
The Caribbean is the only subregion that will grow more than in 2021 with a projected 4.7%, up from 4.0%.
The economic slowdown has been magnified by the repercussions of the war between the Russian Federation and Ukraine, adding to the growing constraints on domestic macroeconomic policy aimed at driving growth. And although some countries in the region – mainly net energy exporters like Guyana – have benefited from high prices on international markets, most countries are experiencing declines in trade, coupled with slowdowns in exports.
On the fiscal front, the countries’ official projections suggest that public spending cuts will continue in 2022, to reduce fiscal deficits and stabilize public debt, which rose sharply in 2020. Economic activity is being hindered by there being less support through monetary and fiscal policy, and already slowed in the first two quarters of 2022.