Originally published in Spanish on Asdrúbal’s personal Substack
In the weeks following the June 24 earthquake, numerous figures regarding the tragedy’s cost have circulated. The World Bank estimated direct physical damages at $19.6 billion, equivalent to nearly 17% of Venezuela’s GDP. These figures help gauge the magnitude of the disaster, but from an economic perspective, they fall short. Confusing damages with economic costs leads to flawed diagnoses and, often, to poor public policy decisions. Furthermore, it is also worth reviewing the methodology behind these measurements, as in many cases the magnitude of the tragedy is being overstated.
The economy doesn’t just lose when a building is destroyed. It loses when that building stops producing, when a company stops selling, when a port stops moving goods, or when thousands of workers halt their activities. The economic cost of a disaster is not measured by the value of what disappeared, but by the income that ceases to be generated while that productive capacity remains out of service. This is what we economists call distinguishing between the stock and the flow.
That is precisely the exercise we are attempting to carry out for La Guaira.
La Guaira accounts for approximately 6.2% of national transactions (based on past studies we have conducted on transactions in Venezuela), which translates to an economic activity of around $6.9 billion annually out of an estimated GDP of $111.3 billion. However, reducing the state’s importance to that percentage would be a mistake. Its true weight lies in the fact that it concentrates over 40% of the national logistics and transportation sector, thanks to the Port of La Guaira and the Maiquetía International Airport. Both constitute the country’s main entry and exit points for goods and passengers. When that hub stops operating, the impact is quickly transmitted to the rest of the economy.
The first commercial census reveals that barely 1,752 establishments remain operational out of the nearly 7,000 businesses existing before the earthquake.
Physical damages in the state likely range between $4 billion and $6 billion. That is, between 60% and 90% of La Guaira’s annual output. That proportion illustrates the magnitude of the asset shock, but it still doesn’t answer the central question: how much did the state stop producing as a result of the earthquake?
To approach that answer, we must observe how the economy functioned in the weeks following the quake. The port remained completely paralyzed for 28 days and only reopened gradually for cargo operations. The Maiquetía airport will recover its normal operations by the end of this year at best, with a partial opening in August. For nearly eight weeks, the two assets that sustain much of the state’s economic activity operated at a minimal fraction of their capacity.
Added to this disruption was the collapse of the business fabric. The first commercial census reveals that barely 1,752 establishments remain operational out of the nearly 7,000 businesses existing before the earthquake. In other words, three out of four companies ceased to function. In parishes like Caraballeda, Macuto, and Catia La Mar, around 40% of commerce suffered significant damage, and tourism (one of the state’s main economic activities) practically vanished for the entire season.
With these elements, it is possible to build a reasonable estimate of the lost flow of economic activity. Our central scenario points to a contraction of nearly 35% of La Guaira’s GDP during 2026, with a year-on-year drop of between 55% and 70% during the third quarter, which represents the peak of activity disruption. The spending associated with reconstruction, the gradual recovery of the port and airport, and emergency credit lines will prevent an even deeper contraction, but they will hardly change the overall diagnosis.
Translated into numbers, La Guaira is expected to lose out on generating around $2.4 billion in economic activity during 2026 compared to the pre-earthquake scenario. That is, perhaps, the best approximation of the disaster’s direct economic cost for the state during its first year. It is a loss equivalent to more than a third of its annual economy, and quite distinct from the cost of rebuilding the destroyed assets.
The earthquake could cost Venezuela between three and four points of growth during 2026 compared to the pre-disaster baseline.
However, even that estimate remains conservative because the state does not operate in isolation. The temporary closure of the country’s main logistics hub drove up transportation costs, forced operations to be diverted to Valencia, Barcelona, and Maracaibo, increased delivery times, caused congestion in alternative ports, and disrupted supply chains in the central region of the country. These indirect effects explain why the national impact ends up being considerably larger than the mere loss of La Guaira’s output.
Our estimate is that the drop in the state’s activity subtracts approximately 2.2 percentage points from Venezuela’s GDP growth due to direct effects. When factoring in the deterioration of the logistics sector and the spillover effects on commerce, manufacturing, and consumption, the earthquake could cost Venezuela between three and four points of growth during 2026 compared to the pre-disaster baseline.
This difference between physical damage and economic cost is not just a methodological detail. It is a fundamental distinction for designing the reconstruction. If the objective is limited to replacing buildings and infrastructure, the country may recover part of the lost assets. But if the priority is to restore La Guaira’s productive capacity as soon as possible, then investment decisions must change. Reconstruction must focus first on the port, the airport, road connectivity, and financing the thousands of small businesses that make up the state’s economic fabric. Every week these activities remain partially paralyzed, the economic cost of the disaster will continue to rise.
During 2027, we will likely see very high growth rates in La Guaira as a result of the reconstruction process and the low baseline left by 2026. It would be a mistake to interpret these figures as a full recovery. Recovering a capital stock equivalent to between 60% and 90% of the state’s annual output will require several years of sustained investment, institutional stability, and access to financing. Yet, every crisis also opens an opportunity to do things better. La Guaira can be rebuilt by replicating the vulnerabilities of the past, or it can become the starting point for a more modern and efficient logistics infrastructure.
If investments are properly targeted, if financing reaches the businesses that sustain the productive fabric, and if reconstruction manages to become a shared project among the public sector, the private sector, and international cooperation, the state will not only recover what was lost: it can emerge stronger. In the end, true success won’t be returning to where we were before the earthquake, but leveraging this tragedy to build a logistics platform capable of driving Venezuela’s growth for decades to come.
The true indicator of success will not be next year’s growth rate, but the speed at which La Guaira regains its role as Venezuela’s premier logistics platform.