UNDP forecasts 6.5% economic growth for Venezuela in 2026, with 385% inflation

The United Nations Development Programme (UNDP) forecasts a notable economic rebound for Venezuela in 2026, projecting a Gross Domestic Product (GDP) growth of approximately 6.5% compared to the previous year. However, this optimistic outlook is tempered by an anticipated inflation rate of around 385%, according to a report released Tuesday.

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The estimation of growth already incorporates the reduction of half a percentage point associated with the initial impact of the (double) earthquake of last June 24.

The UNDP's Macroeconomic Report for Venezuela's first half of 2026 indicates that the growth estimate factors in a 0.5% reduction attributed to the initial impact of a double earthquake on June 24. The agency estimates direct damages from the seismic event at roughly $6.7 billion. Crucially, the forecast does not yet fully incorporate the potential demand surge from reconstruction efforts, which the UNDP suggests could become more pronounced in 2027.

Venezuela's economic activity reportedly continued to expand during the first six months of 2026. This growth is primarily fueled by a recovery in the oil industry, increased commercial activity, and a greater availability of foreign currency stemming from exports. Oil production averaged 1.09 million barrels per day during the semester, and fiscal revenues, encompassing both tax and oil income, showed a "significant recovery," the UNDP noted. The report suggests that revenues from the oil sector could be instrumental in financing productive investments, boosting the country's growth capacity, and supporting post-earthquake reconstruction.

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The estimation of growth does not fully include the demand effects derived from reconstruction, which could manifest with greater intensity during 2027.

Despite these positive indicators, the UNDP cautioned that significant challenges persist. High inflation, exchange rate volatility, limitations within the electrical system, and a cumulative loss of productive capacity are identified as major obstacles to sustaining Venezuela's growth in the medium term. The devastating earthquake on June 24 resulted in at least 6,301 fatalities, affected 856 buildings, and caused 190 structural collapses, according to official figures.

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The production of crude oil averaged 1.09 million barrels per day during the semester, while fiscal revenues, both tax and oil, registered a 'significant recovery'.