Venezuela Economic Forecast

Venezuela Economic Outlook

January 21, 2020

Economic conditions likely continued to deteriorate in the fourth quarter of last year but seemingly at a less severe rate. Oil production rose modestly in October–November after three months of decline, although it was still down more than 40% since the start of 2019 as U.S. sanctions and power outages choked the industry. In turn, authorities have considered allowing foreign capital into PDVSA-led joint ventures as a way of reviving the sector. The dubious appointment of Luis Parra as head of the National Assembly on 7 January reflected the government’s desire to control the assembly in order to draft a law that would allow foreign businesses to run day-to-day oil operations in the country. In addition, a law was passed by presidential decree on 26 December that gives importing firms six months of tax privileges, further suggesting the government is loosening its grip on the economy in an attempt to resuscitate economic activity.

Venezuela Economic Growth

The economy is seen contracting for a seventh year running in 2020, albeit less severely. Easing government regulation should aid private consumption, although shortages are likely to persist amid a lack of hard currency. Meanwhile, oil production looks set to stabilize at current levels, provided no further sanctions are introduced. Some of our analysts may have factored in the possibility of a privatization agenda going forward. As it stands, the Consensus projects the economy contracting 10.4% in 2020, which is down 2 percentage points from last month’s forecast. In 2021 the panel sees GDP falling 1.5%.

Venezuela Economy Data

2014 2015 2016 2017 2018
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

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

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