In the first half of 2025, the most dynamic sector of Venezuela’s economy was undoubtedly energy. The state oil company, PDVSA, assumed full control of the fields following the termination of joint ventures with Chevron. The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) granted Chevron permission only to “preserve assets” and maintain “minimal personnel,” which facilitated Caracas’s efforts to centralize production processes. However, Washington’s new restrictions and the cancellation of the license for the Dragon gas field disrupted Venezuela’s strategic cooperation with Trinidad and Tobago.
Within this complex landscape, the decision of European energy giants such as Repsol and Eni to maintain their operations in Venezuela provided the government with vital breathing space. Eni’s commitment to ensuring gas production, citing the need to avoid a “social crisis,” played a critical role in stabilizing energy supply. The subsequent issuance of a confidential new operating license to Chevron further signaled to the markets that sanctions might ease, positively shaping investor expectations.
A United Nations Development Programme (UNDP) report notes that Venezuela’s Gross Domestic Product (GDP) grew by 7.7 percent in the first half of 2025. Daily oil production reached 1.069 million barrels in June, the highest level since 2019. For the full year, the organization projects growth of 5.8 percent.[i]
Yet these strong figures translated into only limited revenue growth due to a 23 percent decline in international oil prices. Oil exports amounted to 8.025 billion dollars, only slightly higher than in 2024, with 77 percent of sales directed to China. As a result, the increase in production did not bring about a proportional rise in revenues, leaving Venezuela’s external trade balance vulnerable.
Beneath the headline growth figures, inflationary pressures remain extremely high. In the first half of the year, cumulative inflation reached 123 percent and is expected to climb to 275 percent by year’s end. This represents the highest rate in Latin America.[ii]
The 52 percent depreciation of the bolívar in the first half of the year highlights the severity of instability in the foreign exchange market. Despite injecting 1.8 billion dollars into the market, the Central Bank has struggled to curb exchange rate volatility. This situation has reinforced tendencies toward dollarization while steadily eroding confidence in the national currency.
In an effort to translate economic growth into social satisfaction, the government has increased the incomes of public sector employees. Through the “Economic War Bonus”, the minimum monthly income in the public sector rose from 131 to 161 dollars, pensions increased to 112 dollars, and retirement benefits to 50 dollars.[iii] These increases are indexed to the official exchange rate, aiming to partially offset the impact of inflation.
However, the scope of these policies is narrow, and the situation is far more dire for private sector workers. In the private sector, comprehensive minimum income has fallen to 41.4 dollars, while the nominal minimum wage has dropped to just 1.1 dollars—a dramatic 66.5 percent decline compared to 2024. According to UNDP estimates, this amount covers only 5.6 percent of the basic food basket valued at 710 dollars. For an average family to meet its basic needs, 18 minimum wages would be required. Thus, the limited improvements in the public sector fail to offset the deep poverty prevailing in the private sector.
Venezuela’s financial system continues to exhibit fragility. The ratio of credit volume to GDP stands at only 2.6 percent, compared to 22 percent a decade ago.[iv] Such a contraction in credit channels severely limits the private sector’s capacity for investment. While positive developments, such as the new license granted to Chevron, offer a glimmer of hope for foreign capital, the persistence of sanctions and legal uncertainties lead investors to act cautiously.
Moreover, the U.S. cancellation of the license for the Dragon field has complicated regional energy cooperation. This move has had negative implications for energy supply security not only in Trinidad and Tobago but across the Caribbean region.
The income gap between the public and private sectors further deepens social inequality. The relatively protected salaries of public employees stand in sharp contrast to the low wages in the private sector, creating a “two-tiered” economy. Persistent increases in food prices and the depreciation of the local currency are accelerating the erosion of the middle class.
These conditions continue to fuel migration trends. Since 2015, it is estimated that around seven million Venezuelans have left the country. The increase in oil production in 2025 has not been sufficient to halt migration entirely, as the real purchasing power of wages remains extremely low.
This complex economic landscape is also reflected in Caracas’s international relations. The partial easing of U.S. sanctions, the issuance of a special license to Chevron, and the continued operations of some European companies have provided Venezuela with a measure of external relief. However, U.S. targeting of critical projects such as the Dragon field underscores the fragility of the country’s economic recovery.
This situation also constrains the geopolitical maneuvering space of the Nicolás Maduro government. While deepening energy partnerships with China and Russia aim to balance U.S. influence in the region, Venezuela’s economic flexibility remains limited as long as access to the dollar-based global financial system is restricted.
The UNDP report clearly highlights that Venezuela’s growth in 2025 is “oil-dependent yet fragile” in nature. While increases in oil production and public sector wage adjustments have generated short-term dynamism, structural problems persist: hyperinflation, a rapidly depreciating national currency, a lack of investment, and trade restrictions stemming from sanctions are among the key challenges.
The trajectory of Venezuela’s economy in the coming months will depend on the course of oil prices, potential shifts in U.S. sanctions policy, and the government’s commitment to combating inflation. Even if oil production reaches record levels, the benefits of growth may be limited in their impact on the living standards of the broader population as long as the financial system remains constrained and purchasing power in the private sector continues to decline.
In conclusion, the 7.7 percent growth recorded in the first half of 2025 represents not a “turning point” for Venezuela, but rather a “fragile recovery.” Gains in the oil sector are insufficient to cover the economy’s underlying vulnerabilities under the shadow of inflation and sanctions. Genuine economic improvement will require macroeconomic stability, financial deepening, and the revitalization of the private sector. Otherwise, in the second half of 2025, declines in purchasing power and persistent social inequalities may continue for the vast majority of the population, despite rising energy revenues.
[i] Ruiz, Luis Alejandro. “UNDP: Venezuela Grows in 2025, but Oil Rebound Clashes with Inflation and Sanctions”, Guacamaya, guacamayave.com/en/undp-venezuela-grows-in-2025-but-oil-rebound-clashes-with-inflation-and-sanctions/, (Date Accessed: 14.09.2025).
[ii] Ibid.
[iii] Ibid.
[iv] Ibid.
