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8/9/2019 Venezuela report
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COURSE NAME - ECONOMICS FOR BUSINESS
FACULTY NAME - DR. SUJIT K.S
FINAL PROJECT - VENEZUELA
SUBMITTED ON 11/12/2014
SUBMITTED BY :
GROUP - ARJUN MANOJ SMBA1401!
B"AVNA S"RIKUMAR SMBA1402
DIVYA S"ANMUGAM SMBA1402!
SANJANA RAMASES"AN SMBA140!4
DILNA SUD"IR SMBA140##
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TABLE OF CONTENT
S.NO TOPIC PAGE NUMBER
1 Introduction 3
2 National Income Records 4
3 Macroeconomics Aggregates and Analysis 6
4 Economic Policies 6
5 Economic Policies during Recession 13
6 Overvaluation and evaluation o! "urrency 14
# $oreign Reserves 14
% &alance o! Payments 16
' "onclusion 1'
1( Re!erences 21
INTRODUCTION
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)ene*uela+ o!!icially called t,e &olivarian Re-u.lic o! )ene*uela+is a country on t,e nort,ern
coast o! /out, America0 )ene*uelas territory covers around '16+445 m2 353+%41 s mi
it, an estimated -o-ulation around 2'+1((+(((0 )ene*uela is considered a state it,
e7tremely ,ig, .iodiversity0 It is .ordered .y "olom.ia to t,e est+ 8uyana to t,e east+ and
&ra*il to t,e sout,0
A /-anis, e7-lorer gave t,e country its name+ meaning 9:ittle )enice0;
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largely une7-lored 8uiana Big,lands+ accounting !or a.out ,al! t,e countrys total area0 o! )ene*uelas international reserves is in gold+ eig,t times more t,an t,e
average !or t,e region0 Most o! )ene*uelas gold ,eld a.road is located in :ondon0 On 25
Novem.er 2(11+ t,e !irst o! F/G11 .illion o! re-atriated gold .ullion arrived in "aracas0
Manu!acturing contri.uted 1#> o! 8P in 2((60 )ene*uela manu!actures and e7-orts ,eavy
industry -roducts suc, as steel+ aluminium and cement+ it, -roduction concentrated around
"iudad 8uayana+ near t,e 8uri am+ one o! t,e largest in t,e orld and t,e -rovider o! a.out
t,ree@uarters o! )ene*uelas electricity0 Ot,er nota.le manu!acturing includes electronics
and automo.iles+ as ell as .everages+ and !oodstu!!s0 Agriculture in )ene*uela accounts !or
a--ro7imately 3> o! 8P+ 1(> o! t,e la.our !orce+ and at least a uarter o! )ene*uelas land
area0 )ene*uela e7-orts rice+ corn+ !is,+ tro-ical !ruit+ co!!ee+ .ee!+ and -or0
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not sel!@su!!icient in most areas o! agriculture0 In 2(12+ total !ood consum-tion as over 26
million metric tonnes+ a '40%> increase !rom 2((30
8ross national income constant :"F in )ene*uela as last measured at %5+326+63(+(((
in 2(11+ according to t,e Dorld &an0
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&elo are t,e data o! a !e economic aggregates o! t,e re-u.lic o! )ene*uela over t,e years
U$%&'()*&%$+ ,+%
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5%0#1 Inde7 Points !rom 1'#5 until 2(14+ reac,ing an all time ,ig, o! 6%303( Inde7 Points in
August o! 2(140
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in 2(1(
to less t,an 2(> .y t,e end o! 2(120 at t,e end0
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o! 8P in 2(11+ ,ic, as an
im-rovement over t,e 2> -osted in 2(1(0 &ut ,ig,er -u.lic inde.tedness meant t,at t,e
overall de!icit+ at 304> o! 8P+ as only slig,tly .elo t,e 305> !or 2(1(0 o! 8P to 210%> o!
8P0 Interest on t,e -u.lic de.t as a su.stantial com-onent o! t,is increase t,e age .ill
and t,e trans!er o! resources to t,e -u.lic sector ere u- as ell0 "entral government ca-ital
e7-enditure -osted a smaller increase !rom 20'> o! 8P in 2(1( to 301> o! 8P in 2(110
Note in t,is regard t,at in t,e &olivarian Re-u.lic o! )ene*uela muc, ca-ital e7-enditure is
t,roug, o!! .udget !unds lie t,e National evelo-ment $und $ONEN+ ,ic, is !unded
out o! central .an reserves+ contri.utions .y t,e oil com-any PetrJleos de )ene*uela
P)/A+ and t,e ",ina )ene*uela $und+ ,ic, is !unded .y loans !rom ",ina0
Pu.lic inde.tedness o! t,e &olivarian Re-u.lic o! )ene*uela continued to clim. in 2(110
.ut !ell as a -ercentage o! 8P !rom 3(> to 2503>
measured at t,e o!!icial e7c,ange rate0 Fnlie 2(1(+ in 2(11 e7ternal -u.lic de.t rose more
.y 1#03> t,an internal de.t u- 302> measured in dollars0
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C,%+ $ M)$%+,* P)(3*
.eteen ecem.er 2(1( and ecem.er 2(11 M2 rose .y 5306>0
&ot, aggregates !ar out-aced in!lation0 Interest rates !or a.sor-tion o-erations ere
unc,anged in 2(110 Average .an lending rates !ell+ ,oever+ to stand at 16> at year end0
&an lending -iced u- s,ar-ly in 2(110 -rivate .an lending
accounted !or nearly t,ree !ourt,s o! t,e increase0
ROLE OF POLICIES DURING GLOBAL RECESSION PERIOD 8200#-
2009
D,en t,e F/ economy ent into recession during t,e end o! 2((#+ t,e )ene*uelan economy
.egan to slo don0 In 2((%+ t,e orld oil -rices suddenly colla-sed and .ecause o! t,is+
)ene*uela ent into recession !or t,e !irst time since t,e oil strie on 2((2@(3+ it, t,e
economy decreased to .y 303> in 2(('0
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)ene*uela ,ad a large current account sur-lus in 2((% ,ic, meant t,at it as accumulating
in dollars0 D,en t,e oil -rices !ell+ t,e sur-lus colla-sed to a de!icit .ut t,at lasted !or only
si7 mont,s0
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)ene*uela ould ,ave .een muc, .etter o!! it, a !le7i.le and managed e7c,ange rate+
ee-ing its ca-ital controls .ut maintaining a com-etitive e7c,ange rate so t,at t,e economy
can diversi!y aay !rom oil0
In 2(13 again t,e 8overnment announced t,e devaluation o! currency !rom 403( to t,e F/
to 603(0 /,ortly again .y t,e .eginning o! 2(14+ t,e 8overnment devalued t,eir currency yet
again .y 45>0
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The ga!h clealy sho"s #ha# #he Foeign exchange $ese%e &o #he !as#
yeas "ee ac#'ally ('c#'a#ing )'# i# s#ill e*ained in #he highe *agin+
'ing #he yea 201- #he $ese%es s#a#ed #o &all and )y #he )eginning o&
201. i# had eached i#s lo"es# !eiod in #he !as# 5 yeas+
In Oc#o)e 201., #he co'n#y called &o an e*egency OPEC /Ogania#ion
o& Pe#ole'* Ex!o#ing Co'n#ies in an a##e*!# #o s#o! #he &alling enegy
!ices+ E%en #ho'gh ene'ela has #he lages# enegy ese%es in #he
"old, i#s de#eioa#ing econo*y has &oced #he Pesiden#, #o c'# do"n #he
i*!o#s #o co%e &oeign de)# !ay*en#s a*id a se%ee had
c'ency c'nch #ha# has aleady !od'ced sho#ages o& al*os#
e%ey#hing, &o* #oile# !a!e #o *edical s'!!lies+
I# is li3ely #ha# ene'ela "ill &ace a se%ee &oeign de)# cisis )eca'se i#
has !len#y o& asse#s s'ch as oil cagos, s#oc3ed a)oad "hich co'ld )e
seied #o e!ay de&a'l#ed de)#+
4LNCE OF PYMENT6
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2007 2010 2012 201.
01,000,000,000
2,000,000,000
-,000,000,000
.,000,000,000
5,000,000,000
8,000,000,000
9,000,000,000
7,000,000,000
BOP current ($)
4OP c'en# /:
"""+3noe*a+co*
in t,e !irst 1( mont,s o! t,e year0 Im-orts e7-anded .y
2106> -articularly oil im-orts+ ,ic, rose .y %%05> as groing domestic consum-tion
outstri--ed oil -roduct -roduction ca-acity and a num.er o! donstream set.acs ,it
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CURRENT ACCOUNT
"urrent account .alance records t,e country?s net trade in goods and services+ -lus net
earnings !rom rent+ interest+ -ro!its and dividends and net trans!er -ayments suc, as -ension!unds and orers remittances to and !rom t,e rest o! t,e orld during t,e s-eci!ied -eriod0
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And even t,oug, it !ell a .it in 2((# it rose to a muc, ,ig,er level in 2((%0 eaer t,an on t,e same day o! t,e -revious
mont, and mared yet anot,er all@time lo0
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Regulatory e!!iciency+ measured t,roug, .usiness !reedom and monetary sta.ility+ ,as
diminis,ed greatly as state inter!erence in t,e economy ,as gron0
Dit, an economy rated as 9re-ressed; since 2((4+ )ene*uelans ,ave endured economic
stagnation and deteriorating living conditions0 Oil -rices ,ave driven recent strong economic
grot,+ .ut economic develo-ment remains severely constrained0
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REFERENCES
1 .+,$;%3)$)&3.3)&
2 ++'://.6+.3)&/$+(/3&//0/-
001446%4>N7DB
> .;));(%.3)&
# ++'://.3%',.$%+/)'-%--3)(&$/)'-%--3)(&$/%$%@%(-,%3)%,*-
%'%$-)$-%3)$)&3-')(3*
http://www.tradingeconomics.com/http://www.ft.com/intl/cms/s/0/b7a2ee04-5478-11e4-84c6-00144feab7de.html#axzz3LblQQImQhttp://www.ft.com/intl/cms/s/0/b7a2ee04-5478-11e4-84c6-00144feab7de.html#axzz3LblQQImQhttp://www.knoema.coom/http://rt.com/business/211735-venezuela-foreign-reserves-diamonds/http://research.stlouisfed.org/fred2/series/MKTGNIVEA646NWDBhttp://www.google.com/http://www.cepr.net/op-eds-&-columns/op-eds-&-columns/venezuelas-recovery-depends-on-economic-policyhttp://www.cepr.net/op-eds-&-columns/op-eds-&-columns/venezuelas-recovery-depends-on-economic-policyhttp://www.tradingeconomics.com/http://www.ft.com/intl/cms/s/0/b7a2ee04-5478-11e4-84c6-00144feab7de.html#axzz3LblQQImQhttp://www.ft.com/intl/cms/s/0/b7a2ee04-5478-11e4-84c6-00144feab7de.html#axzz3LblQQImQhttp://www.knoema.coom/http://rt.com/business/211735-venezuela-foreign-reserves-diamonds/http://research.stlouisfed.org/fred2/series/MKTGNIVEA646NWDBhttp://www.google.com/http://www.cepr.net/op-eds-&-columns/op-eds-&-columns/venezuelas-recovery-depends-on-economic-policyhttp://www.cepr.net/op-eds-&-columns/op-eds-&-columns/venezuelas-recovery-depends-on-economic-policy