Venezuela Economic Forecast

Venezuela Economic Outlook

December 7, 2017

The country continues to fall deeper into economic crisis. The bolivar traded in the parallel market plunged to a new record low, past 110,000 VEF per USD, in December, losing over half its value in one month. The sharp fall came after President Nicolás Maduro’s announcement at the start of the month that the country would seek to restructure its external debt, which has added more pressure on the parallel dollar, on top of rampant dollar shortages. While Maduro stated that the country would continue to fulfill its debt commitments in the meantime, state-owned oil company PDVSA failed to make interest payments within the 30-day grace period in November, prompting credit agencies to declare the country in “selective default”. A successful restructuring is critical, as over USD 9.0 billion in debt repayments are due in 2018, and it is not known if the government can fulfill this obligation. Details on the proposed restructuring have been so far sparse, but US financial sanctions are likely to complicate any efforts.

Venezuela Economic Growth

Macroeconomic imbalances, unorthodox policies, surging inflation and a lack of investment are expected to keep Venezuela in a severe economic crisis. A default could result in creditors seizing foreign assets, an enormous risk for the crippled economy, while a restructuring could free up some cash, allowing the government to increase imports and stem persistent goods shortages. Met the why particular panelists see the economy contracting 5.0% in 2018, which is down 1.4 percentage points from last month’s forecast. In 2019, GDP is seen falling 1.6%.

Venezuela Economy Data

20122013201420152016
Population (million)29.429.830.230.631.0
GDP per capita (USD)12,95212,38115,929-  -  
GDP (USD bn)380369481-  -  
Economic Growth (GDP, annual variation in %)5.61.3-3.9-5.7-  
Domestic Demand (annual variation in %)12.3-1.9-8.8-11.1-  
Consumption (annual variation in %)7.04.7-3.4-7.8-  
Investment (annual variation in %)23.3-9.0-16.9-17.6-  
Manufacturing (annual variation in %)1.8-0.3-7.2-  -  
Retail Sales (annual variation in %)11.5-  -  -  -  
Unemployment Rate7.87.57.06.8-  
Fiscal Balance (% of GDP)-4.9-1.9-12.9-  -  
Public Debt (% of GDP)27.631.328.5-  -  
Money (annual variation in %)61.069.764.0111159
Inflation Rate (CPI, annual variation in %, eop)20.156.268.5181-  
Inflation Rate (CPI, annual variation in %)21.111.662.2122-  
Inflation (PPI, annual variation in %)16.652.4-  -  -  
Benchmark Interest Rate (%)14.5014.7414.8414.5914.62
Stock Market (annual variation in %)30348041.0278117
Exchange Rate (vs USD)4.306.306.306.3011.00
Exchange Rate (vs USD, aop)4.306.096.306.309.29
Current Account (% of GDP)0.71.20.7-  -  
Current Account Balance (USD bn)2.64.63.6-18.2-  
Trade Balance (USD billion)31.931.627.2-  -  
Exports (USD billion)88.888.874.7-  -  
Imports (USD billion)57.257.247.5-  -  
Exports (annual variation in %)-5.30.0-15.8-  -  
Imports (annual variation in %)8.80.0-16.9-  -  
International Reserves (USD)30.021.022.016.011.0
External Debt (% of GDP)34.435.928.2-  -  

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Venezuela Facts

ValueChangeDate
Bond Yield5.500.0 %Aug 22
Exchange Rate11.000.0 %Dec 06
Stock Market1,3542.04 %Dec 06

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