3. INTRODUCTION
• Venezuela is a country on the northern coast of
South America.
• Its territory covers around 916,445 square kilometres
(353,841 sq mi) with an estimated population of
approximately 29,100,000.
• Considered a state with extremely high biodiversity,
with habitats ranging from the Andes mountains in
the west to the Amazon Basin rainforest in the south,
via extensive llanos plains and Caribbean coast in
the center and the Orinoco River Delta in the east.
4. • Venezuela is among the most urbanized countries in
Latin America
• Vast majority of Venezuelans live in the cities of the
north, especially in the capital, Caracas, which is
also the largest city in Venezuela.
• Since the discovery of oil in the early 20th century,
Venezuela has the world's largest oil reserves and
been one of the world's leading exporters of oil.
5. THE ECONOMY
• Venezuela has a Market-based 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.
• About 50% of Government income is from oil.
• Industries: Petroleum, food processing, textiles, iron
ore and steel mining.
• Venezuela has the least expensive petrol in the
world.
• 60% of Venezuela's international reserves is in gold,
eight times more than the average for the region.
6. THE ROLE OF OIL
• Generated 50% of government revenue over 1991-
2002
• Intuitively, we would expect that volatile revenue
generation, caused by erratic oil GDP, would lead to
unstable fiscal outcomes in Venezuela.
• 5th largest oil exporting country in the world
• 20% of global oil reserves
• 2.3 mn barrels of oil produced per day
• Oil revenues account for approx 95% of export
earnings which is 30% of GDP
• 7% of total OPEC oil production
7. EXPORTS OF VENEZUELA
• Venezuela manufactures and exports heavy industry
products such as iron, steel, aluminum and cement.
• Venezuela has been one of the world's leading
exporters of oil, and it is a founding member
of OPEC owing to the country having the largest oil
reserves in the continent.
• It is also a country rich in Cacao, extracted from its
natural flora, Venezuela is also a leading exporter of
chocolate.
8. ENERGY OVERVIEW
•Venezuela has the largest conventional oil reserves and
the second-largest natural gas reserves in the Western
Hemisphere. It also has vast deposits of extra-heavy crude
oil and bitumen.
•Venezuela consistently ranks in the top four sources of oil
imports to the United States, meeting around 15% of US
requirements. As the world's fifth largest net exporter, oil
accounts for about half of total government revenues.
•Venezuela has been producing oil for nearly a century and
was an OPEC (Organization of the Petroleum Exporting
Countries) founder-member.
9. • Chocolate and oil are main products of Venezuela.
Cacao is the main ingredient of chocolate and it
grows on Venezuela's trees.
• Also some other products of Venezuela are coffee,
rice, sugarcane, bananas and baseball players.
• Venezuela exports Petroleum, aluminum,
steel, rice, corn, fish, tropical fruit, coffee, beef,
and pork.
• The Venezuelan Oil sector represents 80% of
exports.
10. THE IMPORTS
• Venezuela is very inefficient in producing its own
food supply.
• They import two thirds of their food from countries
around the world.
• In 2009 Venezuela imported $967 million worth of
agricultural products such as wheat, corn, beans
animal fats etc.
• Venezuela relies on the U.S. in a big way as both an
importer and an exporter.
• Venezuela imports at least a fourth of its food from
the U.S.
11. IMPORTANCE OF
VENEZUELA
• Has a coastline of 2800 km. Surrounded by three
countries. Location 38 ports. 400 airports.
• Developed modes of transportation
Infrastructure
• 36 hour week, well educated with 95% literacy rate
• Majority of population 65.1% in working age of 15-64
years.
Labor Condition
• 93% of total population is urban.
Urbanization
• 20% of total oil reserves
Oil Production • Large amount of oil sands.
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12. • Venezuela main imports are:
• Imports: Raw materials, machinery and equipment,
construction materials
• Electronics (32 % of total imports)
• Chemical products (18%)
• Agricultural products and livestock (11 %)
• Base metals (8%)
• Food, beverages and tobacco (6%).
13. VENEZUELA’S TRADE PARTNERS
• Main trading partners are:
• United States (22 percent of total exports and 26
percent of imports)
• China (11 percent of exports and 15 percent of
imports)
• Netherlands (7.6% of the exports)
• Others include: Brazil, India, Cuba and Colombia
and Mexico
14. FOREIGN RELATIONS
USA
Friendship with Cuba, Iran and Iraq has severed relationship
Higher oil prices for US, Largest export market for Venezuela
Latin America
• Formation of Bank of South with Argentina, Brazil & Bolivia.
• Severed relationships with Colombia.
China
• In 2010, China has agreed to extend $20 billion loan.
• The loan amount is to be invested in oil sector and China would seek oil
supplies – Tied in Aid.
Iran
• Strong ties in energy production, economic and industrial cooperation.
• Join ventures in sectors like, energy, agriculture and housing
infrastructure.
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15.
16. STRENGTHS
• Water
• Fertile Soil
• The US
• International Oil Cartel
17. WEAKNESS
• Economic Policy
• Inflation
• Tarnished Reputation
• Poverty
• Corruption
• Crime
• Undertaking poor discretionary policy that causes recession
rather than sustaining growth.
• Political incentives that cause Governments to begin
discretionary spending in times of revenue gains.
• Increases in spending growing out of proportion to revenue
growth.
• Absence of entrepreneurial activity
19. THREATS
• Bad Economy could lead to bankruptcy of the
country.
• Volatile Currency.
• Government regulations stifling the country.
• Poor economic diversification
• The growth of its GDP was contracted to -3.3% in
2009 and -1.3% in 2010.
• Increased government spending
• Inflation at 30% in 2010.
20. PROBLEMS FACED BY THE NATION
• Inflation – 30%
• High Crime rate
• Energy crises
• Fluctuating oil prices
• Declining oil production
• Strained relations with partners: US and Columbia
• The unemployment rate has reached 8.6% in 2010
• Importing more than 70% of its needs.
21. CONCLUSION
• Venezuela business cycle is mostly influence by
short term cyclical components.
• Oil revenue is indeed very volatile, due to price
volatility.
• Ran a pro-cyclical fiscal policy.
• Ultimately, left in a fragile economic position.