Twin earthquakes threaten Venezuela’s fragile recovery as GDP loss feared, oil output at risk
The aftermath of the Venezuela earthquake is a concerning reality to face for a broken economy. Infrastructure damage Twin earthquakes that struck northern Venezuela have
The aftermath of the Venezuela earthquake is a concerning reality to face for a broken economy. Infrastructure damage Twin earthquakes that struck northern Venezuela have dealt a potentially devastating blow to an economy already on the brink, raising fears of a prolonged setback to the country's fragile recovery under its US-backed interim government.A 7.2-magnitude foreshock was followed 39 seconds later by a 7.5-magnitude mainshock near the town of Morón in Yaracuy state, about 160 km west of Caracas. The mainshock is the largest earthquake to strike Venezuela since 1900.The USGS had initially projected that the earthquakes would put Venezuela’s GDP at a 2-20% economic loss but has now revised its estimations to economic losses at between 1 and 5% of Venezuela's GDP. Even at the lower end, analysts warn the true toll may be significantly higher than headline figures suggest.Research published by VoxEU found that standard disaster databases systematically underestimate earthquake impacts by excluding events that fall below specific humanitarian thresholds, and that GDP per capita typically remains below pre-shock trends for several years after a major quake, with losses far greater and longer-lasting in low- and lower-middle-income economies where building codes are weak, insurance coverage is scarce, and fiscal space is tight.Venezuela fits that profile precisely.
The country's economy had already shrunk by roughly 80% since 2013, crippled by US-led sanctions, hyperinflation, corruption and mismanagement of the oil sector despite sitting on the world's largest proven oil reserves.Acting President Delcy Rodríguez, who took over after the US capture of former President Nicolás Maduro in January, had been cautiously courting foreign oil companies and seeking sanctions relief. While the US eased some restrictions and oil production gradually increased, inflation remains high and ordinary citizens continue to struggle with low wages.With an embattled economy, there is no clear way for the government to pay for collapsed buildings, a healthcare system that could soon be overwhelmed, and reconstruction bills, all while Caracas negotiates the basic terms of its return to the global economy.Oil infrastructure, Venezuela's primary revenue source, appeared to escape the worst. Most cities reporting severe damage do not host critical oil facilities, and in Maracaibo, near the large oil hub of Lake Maracaibo, no injuries were reported.
The BriefWire