Venezuela Economic Forecast

Venezuela Economic Outlook

September 12, 2018

The economy remains stuck in a deep depression. Despite oil prices hovering at over three-year highs in recent months, oil production continues to fall, plunging by over a third in July in annual terms according to OPEC secondary data. Moreover, although the number of oil rigs—a leading indicator of oil output—ticked up in the same month, it remains close to historical lows. This suggests a continuation of declining production, and with it, diminishing vital oil revenues. On a somewhat positive note, on 20 August, the state-owned oil firm PDVSA reached a payment agreement with ConocoPhillips to settle the USD 2 billion arbitration it was awarded back in April. If PDVSA meets the agreed payment schedule, it could enable the firm to regain control of its Caribbean oil facilities and potentially recoup some of its export losses, as the U.S. company had already moved to seize these assets to enforce its claim. Meanwhile, a series of economic measures started to come into effect that same day with President Nicolás Maduro’s latest attempt to contain hyperinflation and stabilize the freefalling currency. Although it includes moves in the right direction, the reform package is unlikely to achieve its objectives according to analysts.

Venezuela Economic Growth

The outlook remains bleak. The economy will continue to be beleaguered by spiraling inflation, collapsing oil output and exchange rate misalignments. Upcoming hefty external debt repayments and the government’s constrained ability to access financing due to international financial sanctions further compound the country’s woes. Given the severity of the crisis, conditions may emerge for a political transition, a scenario that some of our panelists have already begun to factor into their forecasts. Met the why particular panelists see the economy contracting 12.1% in 2018, which is down 0.8 percentage points from last month’s forecast. In 2019, the panel sees GDP falling 4.2%.

Venezuela Economy Data

Population (million)29.830.230.631.031.4
GDP per capita (USD)12,38115,9296,042-  -  
GDP (USD bn)369481185-  -  
Economic Growth (GDP, annual variation in %)1.3-3.9-5.7-  -  
Domestic Demand (annual variation in %)-1.9-8.8-11.1-  -  
Consumption (annual variation in %)4.7-3.4-7.8-  -  
Investment (annual variation in %)-9.0-16.9-17.6-  -  
Manufacturing (annual variation in %)-0.3-7.2-5.4-  -  
Retail Sales (annual variation in %)-  -  -  -  -  
Unemployment Rate7.57.06.8-  -  
Fiscal Balance (% of GDP)-1.9-12.9-15.6-  -  
Public Debt (% of GDP)31.328.574.7-  -  
Money (annual variation in %)69.764.01111591,121
Inflation Rate (CPI, annual variation in %, eop)56.268.5181-  -  
Inflation Rate (CPI, annual variation in %)11.662.2122-  -  
Inflation (PPI, annual variation in %)52.4-  -  -  -  
Benchmark Interest Rate (%)14.7414.8414.5914.6214.77
Stock Market (annual variation in %)48041.02781173,884
Exchange Rate (vs USD)6.306.306.3011.0011.00
Exchange Rate (vs USD, aop)6.096.306.309.2911.00
Current Account (% of GDP)1.20.7-9.8-  -  
Current Account Balance (USD bn)4.63.6-18.2-  -  
Trade Balance (USD billion)31.627.22.2-  -  
Exports (USD billion)88.874.738.3-  -  
Imports (USD billion)57.247.536.1-  -  
Exports (annual variation in %)0.0-15.8-48.7-  -  
Imports (annual variation in %)0.0-16.9-24.0-  -  
International Reserves (USD)21.522.116.411.09.7
External Debt (% of GDP)35.928.272.5-  -  

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Venezuela Facts

Bond Yield5.500.0 %Aug 19
Exchange Rate248,8320.0 %Aug 17
Stock Market304,8062.04 %Sep 20

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