The Daily Journal.- Oxford Economics cut its 2026 growth forecast for Venezuela by two percentage points to 6.3% after factoring in the impact of the June 24 earthquakes, Bloomberg reported.
The firm also made a more modest adjustment to its 2027 forecast. It now expects the economy to grow 15.5%, one-tenth of a percentage point below its previous estimate, as some of the disaster’s economic consequences will carry over into next year.
Tim Hunter, senior Latin America economist at Oxford Economics, said reconstruction efforts could boost activity during some quarters but would not fully offset the cumulative impact on annual growth.
“Carryover effects mean that annual growth in 2027 will also take a hit, even though reconstruction spending boosts quarterly growth,” Hunter wrote.
The earthquake has also added pressure to an economy that already faces high inflation and sharp exchange-rate volatility. According to Oxford Economics estimates cited by Bloomberg Línea, year-on-year inflation may have reached 572% in July, following a deterioration in confidence and the bolívar’s decline after the disaster.
The firm expects the pace of price increases to gradually moderate, with inflation ending 2026 at 303% before falling to 70% in 2027.
Oil will play a key role in the recovery
The oil industry’s performance stands out as one of the main pillars supporting the economic outlook. Oxford Economics estimates that Venezuela could increase production to 1.5 million barrels per day by 2028, up from the 1.2 million barrels per day recorded in June.
That scenario, however, depends on progress in economic reforms and continued cooperation between Caracas and Washington.
Relations with the United States will also play a decisive role in the bolívar’s performance. Oxford Economics estimates that the currency, currently trading at around 750 bolívars per dollar, could end the year at approximately 859 bolívars per dollar, provided that oil revenues help contain exchange-rate pressures.
Beyond the short-term recovery, Hunter believes Venezuela needs fundamental changes to sustain growth. “A longer-term recovery will require profound institutional change,” the economist said, according to Bloomberg Línea.
The new forecasts account for uncertainty surrounding the damage caused by the earthquakes. At the same time, oil production, Venezuela’s economic policy and the evolution of relations between Caracas and Washington will also shape the outlook.
With information from Bloomberg
