Macroeconomic Performance and Stability of Venezuela Economy

Running head: ECONOMICS ASSIGNMENT
ECONOMICS ASSIGNMENT
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
Part A : Economic performance Indicators.....................................................................................3
Macroeconomic performance of the Venezuela economy over the past 10 years...........................3
Economic growth of Venezuela economy.......................................................................................3
Public debt as percentage of GDP...................................................................................................3
Rate of inflation...............................................................................................................................4
Interest rate......................................................................................................................................4
Current account surplus/deficit as percentage of GDP....................................................................5
Exchange rate trends........................................................................................................................6
Unemployment rates........................................................................................................................7
Part B: Macroeconomic stability and policy...................................................................................8
Evaluation of how 2007-2008 GFC affected Venezuela economy.................................................8
Economic policy approach to economic stabilization used by government..................................10
Analyzing changes in Key economic performance indicators......................................................10
Assessing economic outlook of Venezuela economy....................................................................12
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

2ECONOMICS ASSIGNMENT
Introduction
The present study provides an overview on the macroeconomic performance of the
Venezuela economy for the past ten years. This analysis has been done with the help of
economic indicators such as real gross domestic product, public debt, rate of inflation, Interest
rates, current account surplus as percentage of GDP, exchange rate trends and unemployment
rates. The Venezuela economy is mainly based on petroleum and manufacturing industry. This
country has experienced huge growth since the global economic crisis. The present economic
expansion of the Venezuela is due to oil boom that is driven by rise in the oil prices in the past
and is heading for bust. The Venezuela economy still remains in dire straits. Despite increase in
oil prices, the production of oil has continued to decrease steadily. In the past few years, the
political circumstances has began to stabilize throughout the economic expansion. This economy
has continuous economic growth since onset of political stability. The real GDP has increased at
high rate since the year 2003. Recent evidences reflect that government expansionary monetary
as well as fiscal policies, and exchange controls have highly contributed to the present economic
upswing. This study also focuses on the macroeconomic stability and policy of the Venezuela
economy. This section reflects on the analysis of how the GFC has influenced on this economy
and the economic policy approaches to the economic stabilization used by the government. The
vital changes in economic indicators and present outlook of this economy has been discussed in
this segment.

3ECONOMICS ASSIGNMENT
Part A : Economic performance Indicators
Macroeconomic performance of the Venezuela economy over the past 10 years
Economic growth of Venezuela economy
Over the past ten years, the Venezuela economy dismiss the present economic expansion
as oil boom that might end in disastrous bust as occurred before the Global Financial crisis
(GFC). According to the current data, the real GDP of this economy has increased at an average
of about 98.32 USD billion from the past few years. The real GDP of this economy reached the
highest in the year 2014. Since first quarter of the year 2003, this economy has increased at high
rate. The fastest rising industries during this period has been insurance, finance. Other fast-
growing industries involve trade and repair services, construction, transport and communication.
In fact, the manufacturing sector has been increasing with around 91% growth over the past ten
years.
Public debt as percentage of GDP
Public debt as on its percentage of GDP that is utilized by the investors to estimate
nation’s ability for making future payments on the debt, thereby impacting the nation’s
borrowing cost as well as government bond yields. Venezuela has recorded government debt
around 23% of the nation’s GDP in the year 2017. The public debt as percentage of GDP has
averaged to around 42.39 % over the past few years, reaching all time high at 72.30% in the year
2013 and low at around 20.30% in year 2008. Over the past ten years, the public debt as
percentage of GDP in this economy has fluctuated at high rate. The percentage of GDP of this
economy increased after the recession period (2008-2010) but again slowed down during the
year 2015-2017.