Venezuela - Economy

Economy

The Central Bank of Venezuela is responsible for developing monetary policy for the Venezuelan bolívar which is used as currency. The currency is primarily printed on paper and distributed throughout the country. The President of the Central Bank of Venezuela is presently Nelson Merentes, who also serves as the country's representative in the International Monetary Fund. Venezuela has a mixed economy dominated by the petroleum sector, which accounts for roughly a third of GDP, around 80% of exports, and more than half of government revenues. It suffers high levels of corruption. Per capita GDP for 2009 was US$13,000, ranking 85th in the world. About 30% of the population of the country live on less than US $2 per day. Venezuela has the least expensive petrol in the world because the consumer price of petrol is so heavily subsidized.

More than 60% of Venezuela's international reserves is in gold, eight times more than the average for the region. Most of Venezuela's gold held abroad is located in London. In 25 November 2011 the first of US$11 billion of repatriated gold bullion arrived in Caracas; Chavez called the repatriation of gold a "sovereign" step that will help protect the country's foreign reserves from the turmoil in the U.S. and Europe.

Manufacturing contributed 17% of GDP in 2006. Venezuela manufactures and exports heavy industry products such as steel, aluminium and cement, with production concentrated around Ciudad Guayana, near the Guri Dam, one of the largest in the world and the provider of about three-quarters of Venezuela's electricity. Other notable manufacturing includes electronics and automobiles, as well as beverages, and foodstuffs. Agriculture in Venezuela accounts for approximately 3% of GDP, 10% of the labor force, and at least one-fourth of Venezuela's land area. Venezuela exports rice, corn, fish, tropical fruit, coffee, beef, and pork. The country is not self-sufficient in most areas of agriculture; Venezuela imports about two-thirds of its food needs.

Since the discovery of oil in the early 20th century, Venezuela has been one of the world's leading exporters of oil, and it is a founding member of OPEC. Previously an underdeveloped exporter of agricultural commodities such as coffee and cocoa, oil quickly came to dominate exports and government revenues. The 1980s oil glut led to an external debt crisis and a long-running economic crisis, which saw inflation peak at 100% in 1996 and poverty rates rise to 66% in 1995 as (by 1998) per capita GDP fell to the same level as 1963, down a third from its 1978 peak. The 1990s also saw Venezuela experience a major banking crisis in 1994. The recovery of oil prices after 2001 boosted the Venezuelan economy and facilitated social spending, although the fallout of the 2008 global financial crisis saw a renewed economic downturn.

In 2010, Venezuela was listed as having the highest inflation rate in the world, averaging 29.1%.