Venezuela Economic Forecast

Venezuela Economic Outlook

May 19, 2020

Venezuela’s depression appeared to deepen in the first quarter as the economy reels from the Covid-19 fallout and is poised to be among the hardest-hit countries in the region due to its dependence on oil exports. Dwindling refining capacity amid trickling oil output and U.S. sanctions have resulted in gasoline shortages, spawning black markets and causing prices to balloon. Moreover, power outages intensified in May, which, coupled with a shortfall in food availability and intensifying inflationary pressures, have stoked civil unrest. In response, the government enacted a 60% minimum wage hike on 1 May, while also raising pensions and food bonuses, presumably financed through additional money printing. Meanwhile, after Rosneft’s departure from the country in March casted uncertainty over the oil sector, authorities have approached Iran in order to secure vital gasoline supplies in exchange for gold.

Venezuela Economic Growth

The economy is set to shrink for the seventh year running in 2020. Falling global demand for fuel and U.S. sanctions will cause oil output to crater, hampering the chief engine of economic activity and source of foreign exchange. In turn, government consumption should decline, complicating the state’s capacity to supply vital services to fight the pandemic amid brewing civil unrest. The LatinFocus Consensus projects the economy to contract 19.6% in 2020, which is down 2.0 percentage points from last month’s forecast. In 2021, the panel sees GDP shrinking 1.0%.

Venezuela Economy Data

2015 2016 2017 2018 2019
Population (million)30.630.730.328.927.5
GDP per capita (USD)10,5689,0924,7553,411-  
GDP (USD bn)32427914498.4-  
Economic Growth (GDP, annual variation in %)-6.2-17.0-15.7-19.6-  
Domestic Demand (annual variation in %)-11.8-26.3-21.1-18.2-  
Consumption (annual variation in %)-8.9-19.4-16.2-20.1-  
Investment (annual variation in %)-20.4-45.1-45.3-37.5-  
Manufacturing (annual variation in %)-5.4-  -  -  -  
Retail Sales (annual variation in %)-  -  -  -  -  
Unemployment Rate6.87.37.26.9-  
Fiscal Balance (% of GDP)-15.6-16.8-18.2-  -  
Public Debt (% of GDP)74.792.3120-  -  
Money (annual variation in %)1011591,12163,2574,946
Inflation Rate (CPI, annual variation in %, eop)181274863130,0609,585
Inflation Rate (CPI, annual variation in %)12225543865,37419,906
Inflation (PPI, annual variation in %)-  -  -  -  -  
Benchmark Interest Rate (%)14.5914.6214.7715.0024.00
Stock Market (annual variation in %)2781173,884126,9855,521
Exchange Rate (vs USD)6.3010.0010.00638.246,621
Exchange Rate (vs USD, aop)6.309.2910.0081.9415,910
Current Account (% of GDP)-5.6-0.46.18.7-  
Current Account Balance (USD bn)-16.1-3.98.78.6-  
Trade Balance (USD billion)3.911.022.020.9-  
Exports (USD billion)37.227.434.033.7-  
Imports (USD billion)33.316.412.012.8-  
Exports (annual variation in %)-50.1-26.424.2-1.0-  
Imports (annual variation in %)-29.5-50.9-26.66.5-  
International Reserves (USD)16.411.09.78.87.5
External Debt (% of GDP)38.645.778.7110-  

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Venezuela Facts

Value Change Date
Bond Yield5.500.0 %Aug 19
Exchange Rate248,8320.0 %Aug 17

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