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 CATEGORIESCurrency 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