Venezuela Economic Forecast

Venezuela Economic Outlook

August 6, 2019

Oil production continued to fall in June, confirming that the brief uptick observed in April was short-lived. What’s more, state-run oil firm PDVSA could now lose one of its most prized assets; a U.S. appeals court recently ruled that the Canadian mining company Crystallex may seize shares of Citgo, the U.S-based refiner, as compensation for the nationalization of a gold mine back in 2011. Meanwhile, another large-scale power blackout occurred on 22 July. Against this backdrop, the IMF now sees the Venezuelan economy contracting 35% this year due notably to the freefall in oil output. On the political front, talks between the government and opposition resumed in Barbados on 8 July, with the latest round starting on 1 August. Lastly, on 5 August President Trump announced a near-total economic embargo on Venezuela including the freezing of government assets in the U.S., amplifying the current crisis.

Venezuela Economic Growth

The outlook remains dire. On the one hand, the political standoff between Maduro and Guaidó looks set to continue, though diplomatic talks could lead to a medium-term solution to the impasse. On the other hand, sanctions aimed at starving the government of hard currency worsen the already-dire state of the economy, which has roughly halved in only five years. The possibility of a political transition remains high, a scenario which some of our panelists have factored into their forecasts. FocusEconomics panelists see the economy contracting 25.5% in 2019, which is down 0.5 percentage points from last month’s forecast. In 2020, the panel sees GDP falling 5.0%.

Venezuela Economy Data

Population (million)29.830.230.630.730.5
GDP per capita (USD)7,8707,03010,5689,0924,717
GDP (USD bn)234212324279144
Economic Growth (GDP, annual variation in %)1.3-3.9-6.2-17.0-15.7
Domestic Demand (annual variation in %)-1.9-8.8-11.8-26.3-21.1
Consumption (annual variation in %)4.7-3.4-8.9-19.4-16.2
Investment (annual variation in %)-9.0-16.9-20.4-45.1-45.3
Manufacturing (annual variation in %)-0.3-7.2-5.4-  -  
Retail Sales (annual variation in %)-  -  -  -  -  
Unemployment Rate7.57.06.8-  -  
Fiscal Balance (% of GDP)-1.9-12.9-15.6-15.6-  
Public Debt (% of GDP)31.328.574.792.3-  
Money (annual variation in %)69.764.01011591,121
Inflation Rate (CPI, annual variation in %, eop)56.268.5181274863
Inflation Rate (CPI, annual variation in %)40.762.2122255438
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)6.306.306.3010.0010.00
Exchange Rate (vs USD, aop)6.096.306.309.2910.00
Current Account (% of GDP)2.01.7-5.6-0.46.1
Current Account Balance (USD bn)4.64.9-16.1-3.98.7
Trade Balance (USD billion)31.627.43.911.022.0
Exports (USD billion)88.874.737.227.434.0
Imports (USD billion)57.247.333.316.412.0
Exports (annual variation in %)-9.3-15.9-50.1-26.424.2
Imports (annual variation in %)-13.3-17.4-29.5-50.9-26.6
International Reserves (USD)21.522.116.411.09.7
External Debt (% of GDP)52.156.738.645.778.7

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Venezuela Facts

Bond Yield5.500.0 %Aug 19
Exchange Rate248,8320.0 %Aug 17
Stock Market25,7892.04 %Jul 31

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