BMI View: We have made a number of negative revisions to our macroeconomic outlook for Venezuela inthe Q4 2017 update. The Venezuelan economy continues to be plagued by a number of fiscal andmacroeconomic problems including persistent and chronic hyperinflation, weak government fundamentals,declining real GDP and poor savings and household consumption levels. Furthermore, all metricsregarding insurance reporting are distorted due to hyperinflation and a very complex exchange rateregime. We have further downgraded the GDP contraction rate for 2017 and do not estimate any real GDPgrowth till end 2020 based on input from the BMI in house Country Risk Team's latest negative assessmentof the economy.
In H2 2017, Venezuela has been witnessing a very high rate of social and political unrest, coupled withprotests, armed forces interventions and political strife. The ground reality in the country being far worsewith reports suggesting widespread poverty, hunger, famine and a serious shortage of food, medicine andbasic essentials. We are now forecasting another year of notable decline in terms of real GDP, rampant andpersistent chronic hyperinflation and reduced spending powers, all factors hurting insurance industryprowess.
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