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COUNTRY INSIGHTS

Inflation accelerates again
VENEZUELA · Report · 14 Nov 2016

As we predicted, inflation is accelerating owing to three factors: The surge in the price of the dollar in the parallel market since October, with a 40 percent increase MOM; strong monetary expansion since August with year-on-year rates rising to 127 percent in the first week of November, a recor...

Looking into the $909 million decline in foreign reserves on 10/26
VENEZUELA · In Brief · 07 Nov 2016

The $909 million decline in BCV’s foreign reserves on Wednesday, October 26 deserves a comment. We have reason to believe the money went to help Pdvsa cover its 31 October/2 November debt service payments and not to Gold Reserve, as originally thought. Gold Reserve informed in a 4 November press ...

Wage increases: dangerous game
VENEZUELA · Report · 07 Nov 2016

This year’s fourth minimum wage increase came into effect on 1 November. The increase itself is not a surprise; in fact, we anticipated it in our forecasts. But its intensity and features are surprising, making it expensive and dangerous. It’s driven by politics and will fuel inflation and recess...

Minefield
VENEZUELA · Report · 02 Nov 2016 · 1 response

Open confrontation in Venezuela has led to dialogue and a 10-day truce before round two of talks, though not without some hairline fractures within the opposition coalition—some parties opted out, others merely expressed dissent, and no top party leaders attended. Thanks to the pressure it was...

Forecasting in times of transition
VENEZUELA · Forecast · 31 Oct 2016 · 2 responses

Venezuela’s economy has had a record bad year in 2016. For all of 2016, we forecast that GDP will fall by 11 percent and private consumption by 10 percent. Emergency government measures have temporarily averted hyperinflation, but inflation will end the year at 457 percent. We project that financ...

Turning point
VENEZUELA · Report · 24 Oct 2016

The focus of political conflict is no longer the recall referendum. It has turned to constitutionality and legality of Maduro’s government.

20% indefinitely postponed
VENEZUELA · In Brief · 20 Oct 2016 · 2 responses

The National Electoral Council (CNE) announced tonight that the collection of digital signatures from 20 percent of the electorate scheduled for October 26–28 is indefinitely postponed. The decision is based on questionable injunctions issued earlier in the day by five municipal-level criminal co...

2017 Budget: Bad News
VENEZUELA · Report · 18 Oct 2016 · 1 response

The 2017 budget was approved on 17 October by the Supreme Tribunal of Justice (TSJ) under unprecedented legal and institutional circumstances.

Inflation will rise again
VENEZUELA · Report · 17 Oct 2016 · 1 response

We revised down our inflation estimate for August and September to 11.8 percent and 9.4 percent in view of new data for food and personal care showing slower price increases and even some decreases in some market segments. The slowdown reflects stronger government imports of final goods and indus...

Political transition seems inevitable
VENEZUELA · Report · 04 Oct 2016

Political tensions are high in Venezuela. Everyone expects a transition soon, but no one is certain when it will happen or who will control it. After a long delay, the National Electoral Council (CNE) announced that the second of three stages in the presidential recall process—the collection o...

Conflict en route to the 20 percent
VENEZUELA · Report · 15 Sep 2016 · 1 response

The September 1 demonstrations moved Venezuelan politics from an unstable equilibrium to open confrontation. They confirmed massive popular support for a regime change through elections, and strengthened the MUD and the moderate opposition. The government responded by escalating conflict and hara...

Inflation: Temporary Relief
VENEZUELA · Report · 13 Sep 2016

Slower inflation in August and September reflects weaker demand and a slight relief on the supply side. In our view, this moderate slowdown won’t last for long. Falling real income has led sellers to mitigate price increases in order to protect sales and cash flow. The government has helped sl...

September 1 Protest Could Be Game Changer
VENEZUELA · Report · 30 Aug 2016 · 1 response

The opposition’s Coalition for Democratic Unity (MUD) has called for a major demonstration on September 1 and dubbed it the Occupation of Caracas. Its ultimate objective: pressure the government into allowing a recall vote this year. If the referendum is pushed into next year and succeeds, Maduro...

Inflation is unscathed
VENEZUELA · Report · 19 Aug 2016

Over a month ago, the government launched the Mission for Sovereign and Secure Supplies. So far, efforts to improve the distribution of basic consumer products managed to get some goods to the shelves in the government’s establishments but informal markets and price dynamics remain intact.

Feeding Inflation and Recession
VENEZUELA · Report · 15 Aug 2016 · 1 response

The minimum wage increase announced by President Maduro on August 12 enters into effect in two weeks. It’s the third hike imposed by decree this year and brings about a 50 percent increase in the minimum wage and a 129 percent increase in the food bonus. The monthly total minimum income rises by ...

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