Venezuela's economy facing recovery? Financial expert analyzes the situation after moving away from socialism and the outlook for growth.

Venezuela's economy facing recovery? Financial expert analyzes the situation after moving away from socialism and the outlook for growth.

According to a report by amp2.handelsblatt.com,

Venezuela is going through a period of economic upheaval as the country moves from a socialist system to capitalism. Although the country's economy has experienced a period of growth after years of decline, the future prospects remain uncertain. While the gross domestic product grew by 8 percent last year, an increase of only 5 percent is expected for the current year. Inflation is at a shocking 471 percent and prices in the country are highly irrational.

The acceptance of the US dollar as a payment and settlement unit has led to a certain boost in confidence and the utilization of companies has also increased. However, there is a great deal of distrust regarding foreign investment due to the harsh US sanctions against Venezuela. Large foreign investments would be necessary, especially in the areas of oil, energy and mineral resources, in order to stabilize the economy. However, it is questionable whether and when the sanctions will be relaxed and whether the political situation in the country is stable enough to allow private investments. Ultimately, the further development of the Venezuelan economy depends largely on the transparency of the upcoming elections and the decisions of the dictatorial President Nicolás Maduro.