Venezuela Economic Forecast

Venezuela Economic Outlook

August 7, 2018

The economy remains in dire shape. According to the opposition-controlled congress, the economy contracted 12% year-on-year in the first quarter on the back of falling oil output—a reflection of years of chronic underinvestment and mismanagement in the all-important industry. In June, oil production slipped to a new multi-year low while the number of active oil rigs dropped to the lowest level in over 15 years, pointing to further declines in output. Moreover, the bolivar continued to tumble in both the official and parallel markets in July, further feeding into spiraling inflation. In late July, President Nicolás Maduro announced his first set of economic measures that seek to contain hyperinflation and stabilize the free-falling bolivar, which include a monetary reconversion and potential loosening of currency controls. The details of how these policies would be implemented, however, remain unknown.

Venezuela Economic Growth

Rampant inflation, dwindling oil production and a dysfunctional exchange rate system are expected to keep the economy in depression. Increased financial pressure from sanctions also compound the country’s woes. Furthermore, the recent government proposals are expected to be ineffective in tackling the crisis. The severity of the crisis may generate the conditions for a political transition, with the latest incident being an apparent assassination attempt on President Maduro on 4 August, and is a scenario that some of our panelists have begun factoring into their forecasts. Met the why particular panelists see the economy contracting 11.3% in 2018, which is down 0.1 percentage points from last month’s forecast. In 2019, the panel sees GDP falling 4.1%.

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 15
Stock Market160,6762.04 %Aug 15

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