- Angel Bermudez (@angelbermudez)
- bbc news world
The Venezuelan economy has returned to the path of growth after eight years of continuous decline.
Multilateral organizations, investment banks and many experts predict that South American countries will see their gross domestic product (GDP) increase in 2022, although they differ in magnitude.
The Economic Commission for Latin America (ECLAC) ranks Venezuela as one of the countries this year with an estimated 5% growth in the region, while the International Monetary Fund points to a more modest 1.5% . The best forecast ever made public was by investment bank Credit Suisse in April, which points to 20%.
In any case, it’s a welcome change. A country whose GDP has decreased by 80% since 2013,
Despite the new favorable trend, some experts have warned that the economy’s rebound in Venezuela is taking a worrying direction, as it will be a K-shaped recovery.
what does this mean?
Unlike V-shaped recovery, which indicates a drop and rapid recovery; or a U, which indicates slow recovery; K indicates a quick fall followed by an uneven recovery in which some regions are winners and others are losers,
“Although economic performance always varies across different parts of the economy, economists generally understand that the business cycles of recession and recovery are widely correlated across all or most sectors of the economy.
“What makes a K-shaped recovery different is that some parts of the economy can recover faster in the immediate aftermath of a recession, Others may get stuck in slow growth or continue to decline.“, explained on the Investopedia website.
The concept of a K-shaped recovery was popularized by analyzes conducted in 2020 about the response that the United States economy was facing to the crisis caused by the coronavirus pandemic.
But how is this reflected in the case of Venezuela?
an asymmetric recovery
“I call this an alarming K-shaped recovery,” says Leonardo Buniak, economist and risk assessor for NationWorld News.
,It is an economic recovery where growth is not enough, is a bifurcated, asymmetric economic reform. K is a letter consisting of a vertical line and two legs: one that looks up and the other looks down. The one that goes up represents the economic sectors of the Venezuelan economy that are proving to be winners; And what looks down is the economic sectors that are being harmed,” he explains.
He points out that this means that despite growth projections that control Venezuela, not all sectors are going to grow, so these calculations do not reflect what is actually happening within the Venezuelan economy. .
Jose Manuel Puente, professor of economics at the Institute of Higher Administration Studies (IESA), believes it is still too early to know whether the recovery will be K-shaped.
The expert created a “consensus projection” taking as a reference estimates prepared by a dozen accredited institutions that monitor the Venezuelan economy—including multilateral organizations, investment banks, etc.—and concluded that is is oneany eGDP of that country will grow between 4% to 5%,
However, he points out that there is great uncertainty about the likelihood that this recovery will continue over time, among other things, because it is partly driven by an exogenous event, such as a rise in oil prices due to the Russian invasion. growth. ,
,There are many doubts about the stability of this increase over time. Because Venezuela has not implemented a stabilization program with fiscal, monetary and exchange policy. Basically, Venezuela’s macroeconomic fundamentals remain the same and the problems that drove Venezuela into such an intense recessionary cycle still exist,” explains Puente.
winners and losers
Among the main beneficiaries of this growth, Buniak cited commerce, supermarkets, pharmacies, telecommunications, services and food.
,Many of the sectors that are growing are linked to imports., In Venezuela, the government has maintained a marked overvaluation of the exchange rate, where the rate of depreciation of the exchange rate in relation to the dollar is much slower than inflation,” he explains.
Among those who are losing out, economists refer to Venezuelan producers of tradable goods, such as the manufacturing, textile, automotive and industry sectors in general, as they must compete with imported products, which are priced higher than Bolivar’s. The valuation is artificially low. ,
Tourism and construction sectors are also among the affected sectors.
a more unequal country
José Manuel Puente indicates that this divergent reform has several dire economic consequences, such that, for example, some sectors that are very important to generate long-term growth in the country, such as industry, do not show improvement.
This indicates that there are also effects from the point of view of distribution because There are some sectors which create many jobs which are not recovering.
“Construction is the sector that absorbs the greatest amount of labor and where many of those workers are from lower socioeconomic strata, and that sector is not becoming more dynamic as a result of this temporary boom,” he explains.
Buniyak, for his part, emphasizes socioeconomic consequences.
“When we talk about areas that benefit or harm, we have to remember that these are linked by families and, therefore, K affects the population socioeconomically. In other words, When the economy grows in size, it is telling you that economic and social inequalities are increasing. In Venezuela,” he explains.
Experts point out that the inequalities that are developing are also of a regional nature, as not all regions or cities in Venezuela are benefiting from economic recovery.
,Caracas has focused on the benefits of being the capital of the republic with the best servicesinfrastructure, water, electricity, fuel, etc… but the interior parts of the country, the provinces, are highly affected [por fallas en esos servicios], Therefore, very significant regional disparities have also been marked in Venezuela,” he says.
Summarizing his view of this uneven development, José Manuel Puente points to the division of the country’s population into two blocks.
“A range of high-value goods destined for consumption by 5% or 6% of the population are experiencing great mobility, while 94% of the population is affected by all benefits. The latest survey of living conditions Encovi Life it measures that 94.5% of the population lives in poverty, i.e. they do not have the income to access a basic standard basket of food and medicine,” he says.
“Thus, only 5.5% of the population is left out of that classification and they are the ones who may still live [supermercados que venden productos importados y de lujo]Which can fill restaurants and flights to Europe.
“What is being generated is a dual model, in which, in essence, people are either buying luxury imported products in a bodegon and coming to a Ferrari, or they tear up garbage bags (to find something to eat). are,” he concluded. ,
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