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Venezuela Country Risk Report Q3 2018

Venezuela Country Risk Report Q3 2018

Venezuela's economic and political crisis will stretch into a fifth year in 2018. Declining oil production, hyperinflation and a poor business environment will keep the economy in a deep recession.

The administration of President Nicolás Maduro will stoke further inflation through expansionary fiscal policy and drive escalating unrest as it isolates the political opposition.

Hyperinflation and a general loss of confidence will keep severe depreciatory pressures on the bolívar, ensuring that the parallel market value of the currency remains weak.

Political risk will remain extremely elevated due to severe short-ages of essential goods, which underpin regular unrest, and the institutional crisis between the opposition-controlled legislature and PSUV-controlled executive and judiciary. The installation of the supra-legislative constituent assembly has exacerbated this is-sue, as has Maduro's re-election victory in May 2018 in a vote the opposition viewed as illegitimate.

The country is in default, and will face difficulty making upcoming debate payments. Creditor action is a real possibility in 2018, namely the acceleration of principal payments and attempts to seize Ven-ezuela's external assets, including oil shipments.


Executive Summary
Core Views
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Next Government Will Implement Drastic Reforms
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
Risk Of Asset Seizures Will Weigh On Oil Exports
Outlook On External Position
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
TABLE: TOP 5 GOODS EXPORTS
TABLE: TOP 5 GOODS IMPORTS
Monetary Policy
Price Growth Shows No Sign Of Slowing
TABLE: INDEPENDENT ESTIMATES OF VENEZUELAN INFLATION
Fiscal Policy And Public Debt Outlook
No Sign Of Imminent Change To Fiscal Policy
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURES CATEGORIES
Currency Forecast
Currency Re-Denomination Will Not Halt Collapse
Chapter 2: 10-Year Forecast
The Venezuelan Economy To 2027
Structural Weaknesses Underpin Poor Long-Term Growth Outlook
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Maduro Wins, Pushing Political Crisis Into A New Phase
Long-Term Political Outlook
Venezuela's Political Crisis:Four Scenarios
Chapter 4: Operational Risk
Operational Risk
TABLE: OPERATIONAL RISK
Business Crime
TABLE: MAIN ACTIVE ORGANISED CRIMINAL GROUPS
TABLE: BUSINESS RESPONSE TO WHITE COLLAR CRIME AND ORGANISED CRIME
Education
Chapter 5: BMI Global Macro Outlook
Key Divergences Emerging In World Economy
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: VENEZUELA – MACROECONOMIC DATA & FORECASTS

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