What Is Going On in Venezuela? - Economic Perspective
Santiago Bel
September 28, 2025
Venezuela’s story is a stark warning - a nation once flush with wealth, thanks to huge oil deposits, now struggles with an astonishing downturn. Over the last ten years, things spiraled: prices soared out of control, basic goods vanished, people fled. To grasp what happened, consider how reliant they were on oil revenues, their handling of money and spending, underlying problems within the system, also the role played by global events – like restrictions from the United States alongside political maneuvering.
Venezuela’s economy wobbles because it relies so heavily on oil. Nearly ninety percent of what the nation earns from selling goods abroad comes from petroleum - a situation that has persisted for many years. Throughout the 2000s, with oil fetching top dollar, the Venezuelan government boosted welfare, offered big discounts on products, broadened public services - yet didn’t build up other businesses within the country. Consequently, when oil prices tanked around 2014, Venezuela was deeply exposed, so income for the government dropped sharply. Government finances hit a wall, revealing how much the nation depended on one thing. Simultaneously, oil production plummeted - from 3.1 million daily barrels in 2013 to a little above 1 million by 2024 - because of neglected upkeep, poor decisions, alongside failing systems.
The economic trouble worsened because of how interest rates were managed. Simultaneously, the government dealt with budget shortfalls by creating more currency - a move that quickly caused prices to skyrocket. Venezuela’s money lost all value by 2019 - prices soared over a million percent, effectively wiping out what people could buy. Attempts to regulate pricing backfired, instead causing more problems. Because official prices stayed too low for companies to make a profit, they shut down or sold items secretly, which meant folks couldn’t find basic necessities like groceries, drugs, or even cleaning supplies. Tightening currency rules created more trouble. The government restricted buying foreign money, so importing goods became costly - often unattainable. Instead of calming things down, these actions shook up markets, meaning people struggled to get what they needed.
Trade between nations, alongside penalties, mattered greatly. Following rightful accusations that Venezuela’s leadership weakened democracy, the U.S., along with others, limited oil shipments then leveled restrictions against individuals within the Venezuelan government. Venezuela was already struggling when penalties took hold, yet those measures deepened shortages of dollars, cut off connections to global finance, then amplified its economic distance from others. The U.S. responded by assisting nearby nations sheltering Venezuelans - also applying pressure on the Maduro regime hoping for change, but curbing funds that might solidify its power.
Venezuela’s economic troubles hit people hard. Since 2014, more than seven million citizens - according to UN counts - have left home, fueling a huge wave of migrants across the Americas. Back in Venezuela, life is a struggle; power outages are frequent, medical care worsens, likewise paychecks shrink because prices skyrocket. Despite letting people use US dollars alongside the local currency - even cryptocurrencies such as USDT - salaries in Venezuela still don’t buy much, says the country’s central bank. To illustrate, projections show that by mid-2025, the lowest pay will translate to only a handful of dollars each month when accounting for this shift.
The government shifted gears a little. They eased up on certain price restrictions alongside currency limitations, now seeing wider use of overseas money in deals. It’s curbed rising prices to an extent, also granting businesses more wiggle room. These fixes only scratch the surface; they don’t get at what’s truly broken. The core issues – an economy hooked on oil, too little support for new businesses, dishonesty, and also decisions driven by politics instead of sound economics – are still firmly in place. Real, lasting recovery demands big changes in how things are done.
Venezuela’s troubles show how closely global money matters link to power struggles. It isn’t just happening within their borders - it impacts the whole area. Countries nearby, specifically Colombia, Brazil, likewise Peru, are feeling the weight of people moving across boundaries. When Venezuela pumps less oil, everyone notices - especially at the gas pump. This dip, alongside other disruptions, shifts energy costs globally. Meanwhile, the United States tries to sway things in Venezuela through actions like restrictions or assistance, hoping to benefit both Venezuelans and its own plans. It shows how trouble within one nation’s economy can ripple outward.
Venezuela shows what happens when a nation leans too heavily on one thing, spends recklessly, lets politics meddle with business. It underscores how vital it is to have varied industries, open government, and the capacity to adjust smartly during tough times. Though things like using stablecoins offer temporary help, real turnaround requires fixing deep-rooted issues - problems still facing the country.
Venezuela serves as a stark warning. A downward spiral began with decisions regarding its economy - a reliance on oil, warped markets, poor leadership - further worsened by outside pressures. Consequently, countless people left seeking better lives; those still there endure hardship each day. Though easing rapidly rising prices, Venezuela’s economy remains fragile. It demonstrates to experts - those crafting policy, watching from afar - how closely a nation’s leadership, its handling of resources, alongside world trade, connect. Maintaining both sound institutions moreover a stable economy isn’t simply about well-being within the country; it affects surrounding areas too, indeed impacts everything.