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I was wrong, and the Economist was correct about ranking of Venezuela’s economy in 2001


An Economist article recently stated that “In 2001 Venezuela was the richest country in South America; it is now among the poorest.”

That didn’t sound right to me at all so I checked the IMF’s website. The Economist didn’t say by what measure it was ranking Venezuela the “richest” in 2001 but the proper way to do it would by using GDP per capita converted for purchasing power parity (PPP). The way the IMF was calculating PPP as of 2012, Venezuela would have ranked third in South America in 2001. I asked the Economist to correct their article, but then a friend pointed out to me that the method of determining PPP had changed soon after 2012. Using the updated PPP calculations, Venezuela did indeed rank first in South America by that measure in 2001 as the Economist presumably meant.

It’s worth reviewing some economic history using the updated IMF data.

In 1999, when Hugo Chavez first took office, Venezuela ranked second in GDP per capita using PPP. It did indeed rise to first in 2001, but then it dropped down to third by 2003 thanks to an opposition-led coup and oil strike aimed at overthrowing the democratically elected government. Venezuela kept that third place ranking for several years. It made rapid progress after 2003 but so did the region in general. In 2010, it dropped to fourth and kept that spot for the next five years.

As of 2016, the IMF website has Venezuela ranked fifth out of ten countries in South America by GDP per capita based on PPP.  Finalized data for 2016, which was a horrendous year for the country, may show Venezuela slipping down even further down, at the very worst to about the level of Peru, whose right wing president has demanded foreign intervention in Venezuela under the guise of providing “humanitarian aid”.  Saying Venezuela is “among the poorest” in South America (as the Economist describes Venezuela’s current situation) is vague but it could be taken to mean “among the bottom half” and, by that definition, may now be true. Nevertheless, it is worth actually looking at the latest numbers given the way the international press has reported about Venezuela.

Ten South American Countries Ranked by GDP per Capita based on PPP as of 2016 :

SOURCE IMF

Chile  GDP based on purchasing-power-parity (PPP) per capita   23,969.08
 Uruguay  GDP based on purchasing-power-parity (PPP) per capita  21,570.22
 Argentina  GDP based on purchasing-power-parity (PPP) per capita  20,170.78
 Brazil  GDP based on purchasing-power-parity (PPP) per capita  15,211.28
 Venezuela  GDP based on purchasing-power-parity (PPP) per capita

15,102.75

 Colombia  GDP based on purchasing-power-parity (PPP) per capita  14,161.75
 Peru  GDP based on purchasing-power-parity (PPP) per capita  13,018.95
 Ecuador  GDP based on purchasing-power-parity (PPP) per capita  11,036.56
 Paraguay  GDP based on purchasing-power-parity (PPP) per capita  9,353.63
 Bolivia  GDP based on purchasing-power-parity (PPP) per capita  7,190.61

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