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Venezuela: Latin America’s Richest?

Venezuela will replace Chile as Latin America's GDP per capita champion and Argentina as the region's third-largest economy.


Venezuela will replace Chile as the country with the region's highest GDP per capita and
Argentina as the region's third-largest economy, according to a Latin Business Chronicle analysis of data from the International Monetary Fund (IMF).

Venezuela's GDP per capita is estimated to reach $11,933 this year. That's higher than the estimated figure for Chile of $10,126. The IMF estimates also show that Venezuela's GDP is set to reach $334.7 billion this year, while that of Argentina will likely end up at $323.8 billion.

However, Venezuelan economist Jose Luis Cordeiro warns that the comparison with Chile may be misleading.
"Such numbers are at the official exchange rates," he says. "At the parallel market rates, the numbers are only half, and Venezuela looks more like Peru."


And Venezuela will likely lose its status as Latin America's third-largest economy as soon as next year, when Argentina's GDP again will be larger, the IMF forecasts. When it comes to GDP per capita, Venezuela is likely to remain the top country in Latin America through the next five years, the fund predicts.

Venezuela's economy grew by 8.4 percent last year, but is starting to see a slowdown. This year it should expand by 5.8 percent and next year only by 3.5 percent, according to IMF forecasts. Argentina's economy will see a similar trend, albeit not as marked. Last year, its economy expanded by 8.7 percent. This year it should grow by another 7.0 percent before expanding by 4.5 percent in 2009.
Venezuela isn't the only country advancing on Latin America's GDP and GDP per capita rankings. Panama is expected to replace El Salvador as the region's 13th-largest economy, while Honduras will likely replace Paraguay as the 16th-largest economy, according to our analysis of IMF forecasts.  Panama's GDP will likely reach $22.9 billion this year, passing that of El Salvador at $21.8 billion.  And Honduras is set to reach a GDP of $13.8 billion, which will be higher than Paraguay's estimate GDP of $12.1 billion. And Panama and Honduras are expected to keep their new rankings the next five years, according to our analysis of the IMF forecasts.


However, despite Panama's improvement on the GDP ranking, it will fall one spot on the GDP per capita ranking this year.  Costa Rica is set to replace Panama on the 7th spot, thanks to an estimated GDP per capita this year of $6,990 versus $6,717 for Panama. Peru is likely to replace the Dominican Republic on the 9th spot, thanks to an estimated GDP per capita of $4,415 versus $4,235 for the Dominican Republic.

All in all, Latin America's GDP is set to reach $4.1 trillion this year, the IMF estimates. That's twice as much as that of Central- and Eastern Europe, 135 percent higher than that of the Middle East and three times as high as that of Africa, our analysis shows.

Brazil and Mexico remain the top two economies and Colombia, Chile and Peru will continue being ranked among the top seven.  Other key results of the 2008 rankings for GDP and GDP per capita:

  • The Dominican Republic remains the largest economy within the CAFTA trade group, while Costa Rica remains the pact's leader when it comes to GDP per capita.
  • Haiti remains Latin America's poorest nation ranked by both GDP size and GDP per capita, followed by Nicaragua
  • Paraguay remains the poorest nation in South America ranked by GDP size, while Bolivia has that "honor" when it comes to GDP per capita. 

© Copyright Latin Business Chronicle

EDITOR'S NOTE: Updated June 24 with comments from Cordeiro.

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