Venezuela Economic Forecast

Venezuela Economic Outlook

March 17, 2020

Venezuela’s depression likely deepened in the first quarter of 2020, after an apparent moderation in the pace of contraction in Q4 2019. The government’s initiative to privatize part of ailing PDVSA, the state-owned oil giant, at the outset of the year and improvements in commercial activity thanks to partial dollarization showed encouraging signs for economic activity going forward. However, an escalation of U.S. sanctions and plummeting crude prices in Q1 are set to hamper the economy in the short-term. In February–March, the Trump administration further squeezed the Venezuelan government by sanctioning two of the trading arms of Russia’s state oil producer Rosneft, which handles about half of the country’s oil exports, while also putting several companies that continue to do business in Venezuela on notice, including Chevron, Reliance Industries and Repsol. Moreover, March’s plunge in global oil prices is set to further stifle badly-needed state revenues and will likely obstruct the government’s efforts to retool PDVSA.

Venezuela Economic Growth

The economy is seen contracting for the seventh year running in 2020, albeit at a softer pace than in 2019. Easing government regulation and privatization prospects should aid business activity. Nevertheless, the collapse in oil prices is set to erode government consumption and could discourage foreign investment in the oil sector. Additional U.S. sanctions and the spread of coronavirus could exacerbate supply shortages ahead. The LatinFocus Consensus projects the economy to contract 11.0% in 2020, which is down 0.1 percentage points from last month’s forecast. In 2021, the panel sees GDP shrinking 2.1%.

Venezuela Economy Data

2014 2015 2016 2017 2018
Population (million)30.230.630.730.328.9
GDP per capita (USD)7,03010,5689,0924,7553,411
GDP (USD bn)21232427914498.4
Economic Growth (GDP, annual variation in %)-3.9-6.2-17.0-15.7-19.6
Domestic Demand (annual variation in %)-8.8-11.8-26.3-21.1-18.2
Consumption (annual variation in %)-3.4-8.9-19.4-16.2-20.1
Investment (annual variation in %)-16.9-20.4-45.1-45.3-37.5
Manufacturing (annual variation in %)-7.2-5.4-  -  -  
Retail Sales (annual variation in %)-  -  -  -  -  
Unemployment Rate7.06.87.37.26.9
Fiscal Balance (% of GDP)-12.9-15.6-16.8-18.2-  
Public Debt (% of GDP)28.574.792.3120-  
Money (annual variation in %)64.01011591,12163,257
Inflation Rate (CPI, annual variation in %, eop)68.5181274863130,060
Inflation Rate (CPI, annual variation in %)62.212225543865,374
Inflation (PPI, annual variation in %)-  -  -  -  -  
Benchmark Interest Rate (%)14.8414.5914.6214.7715.00
Stock Market (annual variation in %)41.02781173,884126,985
Exchange Rate (vs USD)6.306.3010.0010.00638.2
Exchange Rate (vs USD, aop)6.306.309.2910.0081.94
Current Account (% of GDP)1.7-5.6-0.46.18.7
Current Account Balance (USD bn)4.9-16.1-3.98.78.6
Trade Balance (USD billion)27.43.911.022.020.9
Exports (USD billion)74.737.227.434.033.7
Imports (USD billion)47.333.316.412.012.8
Exports (annual variation in %)-15.9-50.1-26.424.2-1.0
Imports (annual variation in %)-17.4-29.5-50.9-26.66.5
International Reserves (USD)22.116.411.09.78.8
External Debt (% of GDP)56.738.645.778.7113

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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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