Venezuela Facing the Global Economic Crisis

The crisis that exploded in August, 2007, in the United States, originated in the market for high risk mortgage loans in that country; nevertheless, it transformed into a global economic crisis, since, due to the contagion effect, it moved to the Euro zone and to Japan, with a heavy impact on the growth of emerging economies. The objective of this study is to analyze the channels that transmitted this crisis to the Venezuelan economy. The study is of a descriptive-documentary type, recurring to secondary information sources. Conclusions are that, in the Venezuelan case, from the real channel, decrease in oil prices has a double effect: on one hand, it deteriorates cash flows in the balance of payments and, on the other, the fiscal position. From the financial channel, consequences are shown in the negative evolution taken by sovereign risk perception, with a drop in the net balance of investment in fixed assets coming from the rest of the world. Exhaustion of the fundholder/rentist model and de-acceleration of the private sector, combined with an inflationary spiral, become the true source of external vulnerability in the Venezuelan economy.