The challenge for Venezuela's economic recovery is complex, long-term, and urgent, given that its society and state will transition from a broken foundation.

January 3, 2026, could mark a profound change in expectations for Venezuela's economic program. This may even lead to the question of whether we are in the presence of "Irrational Exuberance", a term popularized by Alan Greenspan (1996) and later developed by Robert Shiller (2000), describing the "disconnection of economic fundamentals" and what is expected of a nation’s economy. We might similarly wonder what the Venezuelan economy can achieve in the short and medium term, given its socialist evolution over the past decades.

The first thing to consider is the great transformation the Venezuelan economy underwent at the beginning of the 2000s. It was a profound change in the political economy that had governed that society during 2/3 of the twentieth century: the agreement of society, summarized in the constitution, laws, and institutions, ceased to be in force at the beginning of this century. That change -maintained in force until now- has redrawn a new institutionality, transparency, and rights between the State and society, or the lack of them.

It is worth noting that the Venezuelan economy was an example of growth and stability between the 1950s and 1970s – prior to the nationalization of the oil industry – and managed to multiply GDP per capita by 4.3x, surpassing, during that period, the growth of all Latin American economies. This allowed the economy to reach a GDP per capita of $4.8K at the beginning of the current century, surpassing those of economies such as Peru and the Dominican Republic, both with macroeconomic stability and spectacular growth in the last two decades.

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