Oil Prices and Venezuela's Economy

Publication Date: November 2008

Publisher: Center for Economic and Policy Research

Author(s): Mark Weisbrot; Rebecca Ray

Research Area: Trade

Keywords: Oil supply; Gross domestic product (GDP); Foreign trade

Type: Report

Coverage: Venezuela

Abstract:

This paper looks at Venezuela’s export revenue, imports, and trade and current account balances under a range of oil price outcomes for the next two years. It finds that Venezuela would run large current account surpluses for prices between $60-90 per barrel, and would even run a small surplus with prices at $50 per barrel. (Most oil industry estimates for the next two years are in the range of $80-90 per barrel). The authors conclude that Venezuela is unlikely to run into foreign exchange constraints in the foreseeable future, and can pursue expansionary fiscal policies to counter any economic downturn.