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COUNTRY INSIGHTS

Policy tweaks help but won’t lead to growth
VENEZUELA · Report · 30 Nov 2020

After two years of restrictive and contractionary central bank policies to rein in hyperinflation, the Maduro government seems to be shifting away from that single-minded focus and looking for ways get the economy growing after seven years of recession. It began to loosen bank reserve requirement...

Opportunities for Venezuela in the Biden administration
VENEZUELA · Report · 18 Nov 2020

The Trump administration's sanctions and maximum pressure policy in 2017-2020 failed to remove Maduro from power. The upcoming change in administration is an opportunity to recalibrate the role of the United States in the Venezuelan crisis at a time when international support for Guaidó and the o...

Government spending is skyrocketing
VENEZUELA · Report · 11 Nov 2020

Inflation slowed down surprisingly in October, to 21 percent from 29 percent in September. Public spending didn’t ramp up nearly as strongly as it usually does in October, while tax collection was more vigorous than we had anticipated. The money supply (M2) expanded by merely 19 percent, a pace c...

Outright dictatorship
VENEZUELA · Report · 15 Oct 2020

On October 8, the National Constituent Assembly rubber-stamped Nicolás Maduro’s “Anti-Blockade Law” (Ley Contra el Bloqueo, LCB), which authorizes Maduro to suspend the legal system, decide on any matter, and use public assets as he sees fit and in total secrecy. Its objective is to generate fina...

Inflation picks up some
VENEZUELA · Report · 11 Oct 2020

Consumer prices rose by 29 percent month on month in September, faster than the August pace of 22 percent. The central bank reports 28 percent in its first timely inflation report in five years. Our base case inflation forecast for 2020 is 2389 percent. The dollar price rises by 1,728% and cl...

British Appeals Court's rule on BCV gold
VENEZUELA · In Brief · 05 Oct 2020

On October 5, a British Appeals Court ruled that the legal fight over $1 billion in Venezuelan gold stored in the vaults of the Bank of England (BOE) be remitted back to the Commercial Court that ruled in favor of Juan Guaidó’s Interim Government, seeking clarity on two issues: (1) The UK governm...

Political temperatures shoot up
VENEZUELA · Report · 02 Oct 2020

After a relatively calm spell, political temperatures are again rising, as the government is bent on holding unfair parliamentary elections on December 6 to do away with Juan Guaidó’s Interim Government. The United Nations Human Rights Council’s recent release of its Independent International...

New inflation forecast owing to severe gasoline shortage
VENEZUELA · Report · 15 Sep 2020

We revise up our September-December 2020 monthly inflation forecasts to the 30-38 percent range, from 23-27 percent in our 11 September 2020 report. Gasoline shortages explain a faster-than-expected rise in prices in the first two weeks in September, and we strongly believe that shortages won’...

Public expenditure: the chief inflation risk
VENEZUELA · Report · 13 Sep 2020

According to our estimates, inflation hit 22 percent in August, a number close to our earlier forecast of 23 percent. Also, August brought the slowdown we had projected for the pace of upward dollar movement against the bolivar, to 24 percent from July’s 29 percent. August year-to-date inflati...

The opposition split
VENEZUELA · In Brief · 07 Sep 2020

The December 2020 legislative elections mark the end of a political cycle. Maduro needs to achieve a measure of stability to remain in power until the 2024 presidential election and mitigate the risk of the status quo with an interim government that enjoys international support, unwilling to reco...

An opposition splinter looming nigh
VENEZUELA · Report · 31 Aug 2020

Opposition groups seem to be on the verge of splitting up over disagreements on how to bring about regime change. The G4, coalition of four large parties aligned with Guaidó, will not take part in the elections. Juan Guaidó wants to hold a referendum so that Venezuelans can voice their opposi...

Recession continues to contain inflation
VENEZUELA · Report · 11 Aug 2020

July inflation was 18 percent month on month (our estimate), only slightly faster than June’s 16 percent, despite faster bolivar depreciation against the dollar (the dollar in bolivar terms rose by 29 percent, compared with 8 percent in June). That outcome suggests that the pass-through effect...

2020–2022 Outlook: Recovery possible under new government
VENEZUELA · Forecast · 07 Aug 2020

Avid readers of our research will find this summary to be similar to that of last quarter. This is no accident—our view has changed little over the past few months. Again this quarter, our outlook through 2022 begins with a single scenario for 2020, then branches off into two scenarios for 2021...

Economic pain amid the pandemic
VENEZUELA · Report · 27 Jul 2020

As Covid-19 infections spread exponentially in Venezuela, the government is focusing its economic response on Homeland System cash transfers. Although we expect these transfers to surge in real terms over the second half of 2020, we see them as woefully inadequate, and real household income is st...

Revising down inflation projections
VENEZUELA · Report · 12 Jul 2020

Inflation slowed to 13 percent in June, according to our estimates, down from 53 percent in May. That’s consistent with the low-inflation rate scenario laid out in our June report. Slower rates of money supply growth and bolivar depreciation and weak consumer spending helped constrain inflation. ...

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