What Is Going On in Venezuela? - Economic Perspective
Santiago Bel
September 28, 2025
The story of Venezuela over the last decade is a stern warning to nations across the globe. A once-wealthy nation endowed with plentiful oil reserves, followed by a steep descent down the economic wealth ladder. In the past ten years, prices have skyrocketed, basic necessities have become scarce, and millions have fled out of the country. In order to understand why this has happened, one should consider how dependent the country has been on oil revenues and how its leaders have chosen to manage money and spending, along with considering the global context, especially relating to U.S. political tensions.
Venezuela’s economy is unsteady, as it relies upon oil. Almost all of the country's foreign exchange earnings come through petroleum exports—making Venezuela a “petrostate.” This has been the case for decades. Through the 2000s, with oil prices prevailing at a record high, the government had room to spend money on welfare, subsidies on products, and expanding public services. However, it did not focus on diversifying the country's industries. As a result, Venezuela was left vulnerable when oil prices fell in around 2014, resulting in a sharp drop in the country’s income. The motor behind the government’s finances hit a wall. As a result of the price changes, oil production per day decreased from approximately 3.1 million barrels in 2013 to just above 1 million by 2024 due to insufficient maintenance and poor leadership. According to the Council on Foreign Relations, between 2013 and 2021, Venezuela’s GDP shrank by about three-fourths.
The management of interest rates has worsened the economic problem. When the economic situation started to worsen due to the gas prices, the government started printing money to deal with budget shortages. Soon enough, prices started soaring. Venezuela’s currency was worthless by 2019—goods became more than a million times more expensive than they were before. Regulating prices while inflation worsened created further issues. When official prices remained too low for companies to profit from, they either went bankrupt or sold items “on the sly,” meaning many people couldn’t find necessities like food, medicines, and even cleaning items. Tightening currency rules had the same effect. Because of the government’s restriction on buying foreign money, importing products became expensive and often extremely complicated. Rather than restoring order, these steps sent the markets into disarray, worsening the difficulty people had getting necessary day-to-day supplies.
Trade between nations, along with sanctions, has also played a significant part in shaping Venezuela's downfall. After making supported accusations that Venezuela’s leadership undermined democracy, the U.S. and other nations restricted oil shipments and proceeded to impose further trade restrictions on Venezuela. The country was already under deep strain when the penalties kicked in, but these measures brought about a dollar shortage, disrupted connections to international finance, and further widened the country’s economic gap with the rest of the world. The United States responded to the situation by helping Venezuela's neighboring countries shelter emigrants, hoping to pressure Maduro's government to make changes.
Venezuela’s economic troubles hit people hard. More than seven million citizens, according to UN counts, left home after 2014, causing a giant wave of migrants across the Americas. Back in Venezuela, conditions worsened and still persist today. Power outages happen often, medical care gets worse, and so do paychecks along with the soaring prices. Even after the central bank started permitting the use of US dollars alongside the local currency and even allowing the use of cryptocurrencies like USDT, salaries in the country still don't buy much.
It should still be considered that the government has shifted gears a little. They peeled back some price restrictions and limits on currencies, which has led to a broader use of foreign currencies in contracts. Rising prices have been checked to some extent, giving businesses more profit room. These fixes are just surface-level, as they do not address the broken economic system. The main problems—an oil-dependent economy, inadequate support for new businesses, dishonesty, and politically motivated rather than economically wise decisions—remain firmly ingrained. To achieve real and lasting recovery, there must be a transformation in how things are run, but with Maduro’s authoritarian government, cooperation is difficult.
Venezuela's citizens are also not the only ones feeling the effects of a mismanaged economy. Neighboring countries like Colombia, Brazil, and Peru are receiving waves of immigrants as crime levels rise.
Venezuela is a clear example of what happens when a country puts all its eggs in one basket, spends like there’s no tomorrow, and lets politics intrude in business. The importance of diverse industries, a democratic government, and smart adjustment capabilities during turbulent times has been evident over the last ten years. While measures like using stablecoins can help create temporary relief for citizens, the necessary solution is fixing deep-rooted leadership issues.
Venezuela serves as a bold warning. From the start, its choices about the economy, a dependence on oil, disfigured markets, and criminal leadership, started the downward spiral. The situation was only made worse by its relations with other counties. As a result, many people left looking for better lives, and those left behind suffer daily. Venezuela’s economy is fragile in spite of recent minimal growth. The way that a country’s leadership handles the country’s resources and world trade, demonstrates to the people if they are headed in the right direction, or will deal with the consequences in their everyday lives.