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COUNTRY INSIGHTS

No Clear Way Out
VENEZUELA · Report · 02 Jun 2015

Executive SummaryNicolás Maduro faces a severe political crisis that, if unaddressed, could further destabilize the country and drag down the economy. Pressures on his government include a wave of organized criminal violence, proliferating black markets for basic goods, terrible poll numbers, U.S...

Monitoring Inflation
VENEZUELA · Report · 29 May 2015

Inflation reaches new highs. We forecast the June 2015 CPI MOM inflation at 10.3 percent in June 2015, close to May (10.0 percent). The YOY rate rises to 136.3 percent from 123.7 percent in May. We have adjusted upwards our May MOM inflation rate to 10.0 percent reflecting the impact of the May m...

Russia to the rescue?
VENEZUELA · In Brief · 28 May 2015

The news that Russia plans to invest $14 billion in the Venezuelan oil industry comes in the wake of several visits to Russia by Venezuelan government officials trying to prop up relations with Russia. We have no indications of specific advances in this field. In our view, it’s a generic announce...

Vertigo
VENEZUELA · Report · 22 May 2015

Yesterday, May 21, the price of the dollar in the parallel market broke the barrier of 400 bolivars per dollar in one of the sources we monitor. The average of the five sources we follow jumped 10.7 percent in the day, 25.2 percent in the week, 34.7 percent in the first three weeks of May, 123.1 ...

Anticlimax, for now
VENEZUELA · Report · 06 May 2015

President Maduro’s May 1st announcements were underwhelming. He didn’t take over Polar or other companies but left open the risk of potential takeovers in the food sector by exhorting Polar workers to ready themselves for “big challenges”. With threatening tone he announced "the great socialist o...

Government Under Pressure, but Can Still Win
VENEZUELA · Report · 28 Apr 2015

Executive Summary With most polls showing the opposition more than 30 percentage points ahead of the PSUV, the official party will be hard pressed to win December’s legislative elections. International pressure to free political prisoners and allow observers to monitor the elections is growing. T...

Minimum wage policy in 2015
VENEZUELA · Report · 27 Apr 2015

In coming days President Maduro will be announcing the minimum wage increase for May 1, Labor Day. The government’s urgency to regain public support ahead of the elections will lead to stronger and more frequent minimum wage increases this year. Our base case for 2015 is that Maduro will raise mi...

Heads Up: Eulogio del Pino, Pdvsa
VENEZUELA · In Brief · 17 Apr 2015

Rumors point to the imminent dismissal of Eulogio del Pino, President of Pdvsa, owing to disagreements with Asdrúbal Chavez, Minister of Petroleum, and/or Carlos Malpica Flores, Finance Director. The news has not been confirmed. Del Pino’s departure from Pdvsa would be bad news. He has managed to...

More controls, distortions and corruption
VENEZUELA · Report · 13 Apr 2015

The government again chose the most inefficient, cumbersome, and corruption-prone path to adjustment ahead of the December elections. Cencoex Regulation No 11 (Official Gazette No 40636 dated 04/09/2015) reinforces forex controls and rationing for travel abroad and online purchases using credit c...

White House Sanctions Could Help Maduro
VENEZUELA · Report · 30 Mar 2015

Executive SummaryPresident Obama’s executive order targeting Venezuelan officials linked to human rights violations has boosted Maduro’s government in the immediate term. Maduro declared the country at risk of being invaded and stirred support at home and abroad. At home, Maduro now has decree po...

Recession Through 2016
VENEZUELA · Forecast · 17 Mar 2015

Executive Summary This report extends our macroeconomic outlook to 2016. We revise down our 2015 GDP growth forecast to –9.5 percent (from –6.4 percent) and forecast –2.1 growth in 2016. Inflation remains in the triple digits this year and next. The current account balance turns negative (–$14.3 ...

Government Crackdown
VENEZUELA · Report · 28 Feb 2015

Executive Summary Although the launch of the new Marginal Currency System (Simadi) dominated economic headlines in February, it proved to be much ado about nothing. Despite the economic crisis and approval ratings at a paltry 20 percent, Maduro and his allies have consolidated themselves as chavi...

More of the same
VENEZUELA · In Brief · 10 Feb 2015

In a rather disorganized press conference, Finance minister Rodolfo Marco Torres and Central Bank president Nelson Merentes announced the new forex system. They added little to what President Maduro said on January 21. As expected, the 6.30 bolivars per dollar rate applies to food and medicines. ...

Will China Save the Day?
VENEZUELA · Report · 30 Jan 2015

Executive Summary President Maduro signaled policy continuity in his annual address to the legislature last January 21. We see no signs that severe shortages and spiraling inflation will be tamed and remain as uncertain as we were last month regarding the probability of default. We project net ou...

2014 Inflation: Puzzling Data
VENEZUELA · Report · 28 Jan 2015

In the absence of BCV inflation data, we continue analyzing inflation using the household food basket data published by the Center for Documentation and Social Analysis of the Venezuelan Federation of Teachers (Cendas). This data has shown significant correlation with the NCPI food subindex. Acco...

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