Venezuela Economic Forecast

Venezuela Economic Outlook

November 6, 2018

The economy remains stuck in a deep recession. In September, although oil prices climbed to near four-year highs, oil production—which accounts for over 90% of export revenues—continued to plunge, with output down by over a third in year-on-year terms and at its lowest levels since the 1911s. Moreover, the number of oil rigs, an indicator of future output, remained at historic lows—pointing to further contraction of the all-important industry. Furthermore, on 1 November, the Trump administration unveiled fresh new sanctions in a bid to disrupt Venezuela’s gold exports, ramping up the economic pressure on the Maduro government. Meanwhile, despite the deep financial stress it is under, the state-run oil company PDVSA paid holders of the 2020 bond USD 950 million in interest and principal due 27 October, allowing it to retain control of its U.S. refining unit CITGO which had been pledged as collateral. That same week, PDVSA also made an initial USD 345 million installment in cash and commodities to ConocoPhillips as part of a payment deal agreed in August following a USD 2.0 billion arbitration case awarded to the U.S. oil producer earlier in the year. It is expected that PDVSA will make good on the remaining USD 155 million of the first payment by year-end.

Venezuela Economic Growth

The outlook remains bleak, with the economy expected to continue to be battered by rampant hyperinflation, collapsing oil production and exchange rate misalignments. The difficulty in accessing foreign financing and processing international payments due to financial sanctions only 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 begun to factor into their forecasts. Met the why particular panelists see the economy contracting 7.6% in 2019, which is down 0.9 percentage points from last month’s forecast. In 2020, the panel sees GDP falling 1.2%.

Venezuela Economy Data

20132014201520162017
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

ValueChangeDate
Bond Yield5.500.0 %Aug 19
Exchange Rate248,8320.0 %Aug 17
Stock Market5712.04 %Nov 15

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