Venezuela has entered into recession again, according to economic activity data published by the Venezuelan Observatory of Finance (OVF), which shows two consecutive quarters of contraction after two years of fragile growth.
The OVF indicated that during the second quarter of 2023, economic activity fell by 6.3%, marking another three-month period in the negative territory, following a 7.6% decline between January and March.
“This drop in economic activity occurred in a context of increased oil production, which couldn’t compensate for the declines observed in factors determining the behavior of domestic aggregate demand,” stated the OVF in a press release.
The data for the first quarter was revised, and the 8.3% decline was adjusted to 7.6%, as reported by the independent organization that disseminates data about the Venezuelan economy in the absence of information from the Central Bank of Venezuela (BCV) and other government institutions under Nicolás Maduro’s administration.
Venezuela had emerged from a prolonged recession in the second quarter of 2021 and displayed growth, even reaching double digits due to a rebound effect. However, the conditions to sustain this growth did not solidify, and from late 2021, it weakened and returned to negative territory. The country had been in an economic depression from 2014 to 2021, with an estimated 70% decline in its Gross Domestic Product.
“The weakness in the aggregate demand of the economy is related to at least two important factors: significantly low worker remunerations (…) and the 75% bank reserve policy that inhibits any financing to economic sectors capable of driving short-term growth,” explained the OVF.
The BCV has not provided data on the GDP since December 2022, when it reported that the economy had grown by 17.3% between January and September of that year.