Venezuela earthquake doublet kills 3,811, causes $37 bln in damage

On the evening of June 24, Venezuela experienced a destructive "doublet": two devastating quakes struck less than a minute apart, their epicenters in towns less than two hundred miles west of Caracas. The earthquakes were some of the most powerful in more than 125 years.

Casualties and Damage

As of July 8, the death toll stands at 3,811, and the number injured at 16,740. That number is expected to rise. US Geological Survey modeling in the days following the earthquakes indicated there was a 44 percent probability of the total number of casualties exceeding ten thousand.

La Guaira, a city just north of Caracas and home to Venezuela's main port and international airport, absorbed the worst of it. Videos show entire blocks leveled. NASA satellite radar estimates that approximately 69,400 buildings were damaged or destroyed across the affected region.

Economic Toll

The economic toll is still coming into focus. A preliminary assessment by the United Nations Office for Disaster Risk Reduction puts losses from direct physical damage to buildings and infrastructure at approximately $37 billion, although that figure does not include:

• Interruptions to economic activities and supply chains
• Emergency response costs
• Costs associated with structural retrofitting and reconstruction

This issue of the Economic Pulse of the Americas examines what the earthquakes mean for Venezuela's economy and the country's prospects for recovery after more than two decades of mismanagement.

The Earthquake Followed Years of Decline

What makes Venezuela's situation so dire is the economic collapse that preceded this disaster. As an earlier article in this series uncovered, Venezuela under Hugo Chávez and Nicolás Maduro suffered one of the most dramatic collapses in gross domestic product per capita in modern history, erasing decades of economic progress. At pre-earthquake growth rates, it would have taken Venezuela nearly half a century to reach the average income level of the rest of the region.

That collapse has also gutted Venezuela's physical capital stock, including:

• Electrical grids
• Water treatment facilities
• Public education
• Multi-modal transportation networks
• Oil extraction machinery

Without this physical capital stock, hospitals don't have the power they need to run, water systems fail without maintenance, and buildings lack the reinforcement to withstand a shock like these earthquakes.

Historical Context

This is not the first time this region has faced devastation. In 1999, torrential rains in La Guaira (then known as Vargas state) triggered landslides and debris flows that killed thousands and destroyed large parts of the coast. In the decades since, underinvestment, the nationalization of key industries, and chronic neglect have held back the region's and country's infrastructure.

When a country's capital stock wears down faster than it is replaced or upgraded, its ability to advance economic activity collapses and assets become more vulnerable to damage. The decline that took place well before this summer's earthquakes has left critical infrastructure, industry, and even residential buildings badly deteriorated, compounding the destruction the quakes caused.

Capital Stock in Decline

In constant terms, the value of Venezuela's capital stock in 2023 was nearly the same as it was in 1999, when Chávez came to power. In contrast, the ratio for the entire region grew by over 50 percent. Additionally, before the earthquakes, the value of physical capital available for the average Venezuelan was the lowest in the entire region.

For a more specific illustration of the pre-earthquake deterioration of the country's infrastructure, look to the construction elements cement, iron, and steel. The decline in Venezuela's capital stock closely follows the collapse of its production of these materials, which today stands at historic lows. Cement imports failed to compensate for this decline.