Difficult Times for Venezuelan Merchants
In the bustling market of downtown Caracas, Deniris Camacho, a seasoned merchant, anxiously awaits the first customer of the day. Lamenting the recent months of poor sales, Camacho reflects on the economic slowdown in Venezuela, which has cast doubts after last year’s rebound.
Camacho, who has been selling women’s clothing for three decades, has witnessed the impact of the battered Venezuelan economy, which experienced a 15% growth in 2022 after eight years of recession. However, since December, his sales have plummeted.
With a saddened tone, the 60-year-old merchant points out the irony of his situation. Despite his store being fully stocked with merchandise, the absence of customers leaves him feeling desolate. “This is how we are: alone,” Camacho laments.
A Nationwide Sales Contraction
The crisis extends beyond Caracas, with the central region experiencing a 21% decline in sales. However, the situation is far worse in the provinces, according to the Consecomercio merchants association. In a recent estimate of sales behavior, the association highlighted a striking drop in sales during the first five months of 2023 compared to the previous year.
Consecomercio emphasizes the stark contrast between Caracas and the interior regions, where frequent power cuts and fuel shortages exacerbate the economic woes. The eastern part of the country, known for its tourist destinations, has experienced a staggering 44% decline in sales, while the agricultural hub in the west has suffered a 34% drop.
The “Rebound Effect” Wanes
A dwindling inventory mirrors the decline in sales, as many merchants, like Camacho, have refrained from restocking since December. Tiziana Polesel, President of Consecomercio, explains that the slight economic recovery in 2022 prompted merchants to stock up on inventory. However, the merchandise is now gathering dust due to sluggish demand.
Although Caracas initially saw signs of a rebound last year, with the emergence of new establishments, the momentum appears to be fading. Competition and low demand have led several businesses to shut down or rethink their strategies, overshadowing the once-hopeful signs of recovery. Specialists warn that these developments foreshadow a deepening crisis, forcing millions of Venezuelans to seek better opportunities abroad.
An Unsustainable Economic Model
Economist Pilar Navarro from EMFI Securities criticizes the lack of sustainable economic policies in Venezuela. She attributes the rebound in 2022 to surging oil prices, following the Russian invasion of Ukraine, rather than a comprehensive growth strategy. The country’s economy has further suffered due to a corruption scandal involving the diversion of billions of dollars from the state oil company, PDVSA, in 2022.
The liquidity crisis resulting from the scandal has primed the economy for a destabilized exchange rate, worsened by the country’s effective dollarization. Additionally, Venezuela grapples with rampant inflation, with the inflation rate reaching 436% in May.
A Fragile Stability Amidst Challenges
Despite the prevailing challenges, experts point out that Venezuela’s economy has not completely collapsed. The country has benefitted from additional resources derived from limited operations of the US oil company Chevron, authorized in late 2022. Economist Luis Vicente León credits Chevron for injecting dollars into the market, preventing a macrodevaluation and stabilizing the exchange rate to some extent.
Hermes Pérez, a former bank executive, echoes this sentiment, recognizing Chevron’s role in preventing a further economic downturn. However, he remains cautiously optimistic about the second semester, as uncertainties persist.
For Camacho and other merchants, hope remains a scarce resource. They continue to face adversity with resilience, clinging to what little optimism they have left. “We’re still here,” says vegetable vendor Marielba Clavo, a testament to the perseverance of Venezuelan merchants. While they long for improvement, they express gratitude for what they do have.
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