Venezuela

Abstract

The recession which swept over the Venezuelan economy in 1993 deepened in 1994. In the wake of the political and economic instability of the year before, a severe crisis erupted in the financial system which caused expectations to take a turn for the worse and generated sharp imbalances in exchange and money markets, GDP shrank by 3% and inflation heated up in the first half of the year, closing out 1994 with a 71% increase in the consumer price index (CPi) within an economic environment influenced by exchange and price controls. Although these controls, which were introduced late in June, were adopted as a temporary measure by the administration that had taken office in February, they none the less signalled a turnaround in economic policy five years after the initiation of a liberalization programme.