Business Monitor International


Venezuela Business Forecast Report

Published 19 November 2014 | Quarterly

  • 45 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Venezuela Business Forecast Report

Core Views

  • We expect economic growth to remain sluggish, characterised by a slowdown in private consumption, net exports, and investment. The negative outlook has deteriorated further amid falling oil prices.

  • President Nicolás Maduro has consolidated his position at the helm of the PSUV, but his popularity has waned amid economic difficulties affecting all segments of society. He will continue his predecessor's policies of elevated social spending, resulting in sizeable fiscal deficits.  

  • Inflation will remain elevated, at the highest level in Latin America, and the operating environment will remain very precarious for foreign multinationals in the country.

Major Forecast Changes

  • We have downgraded our GDP forecast for the next several years, amid a growing number of business closures, soaring inflation, and a downgrade to our oil forecasts. We now forecast real GDP to contract by 2.0% in 2014, and expand by only 0.8% in 2015 and 1.9% in 2016, compared to our previous forecasts for the three years of 0.5%, 1.2%, and 2.5%.

  • Also due to our oil price downgrade, we have downwardly adjusted our fiscal account forecasts, to 12.6% of GDP in 2014 (compared to our previous estimate of 8.8%), which we expect will narrow only slightly to 10.3% in 2015.

  • Lower oil prices are also negative for Venezuela's balance of payments position, and we have downgraded our current account to 1.4% of GDP in 2015 and 1.2% in 2016, from 3.3% and 2.7% of GDP, respectively

Key Risks To Outlook

  • Upside Risks: If the Maduro administration were to decide to take steps towards meaningful economic reforms, investor sentiment would rebound relatively quickly, lowering financing costs and increasing FDI inflows.

  • Downside Risks: The potential for elevated  political tensions to materialise in a wider political crisis could result in a further deterioration of investor sentiment and lower economic growth. Although we have already downgraded our oil price forecasts, we...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
PSUV Missteps Pave The Way For Opposition Gains
8
TABLE: Political Overview
8
Long-Term Political Outlook
10
Post-Ch-vez Era To See Greater Turbulence
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Deteriorating Business Climate, Lower Oil Prices Underpin Growth Downgrade
14
TABLE: Economic Activit y
14
Monetary Policy
15
Shortages And Market Distortions To Keep Price Pressure Elevated
15
Fiscal Policy
17
High Social Spending To Keep Fiscal Account Under Pressure
17
TABLE: Fiscal Policy
17
Balance Of Payments
18
Lower Crude Prices To Weigh On External Account
18
TABLE: Current Account
19
Chapter 3: 10-Year Forecast
21
The Venezuelan Economy To 2023
21
Growth Outlook In A Post-Ch-vez Era
21
TABLE: Long -Term Macr oec onomic Forecasts
21
Chapter 4: Operational Risk
23
Operational Risk Index
23
Operational Risk
24
TABLE: Operational Risk
24
Transport Network
25
TABLE: Latin America Transport Network Risks
26
Economic Openness
29
TABLE: Latin America Economic Openness Risk
29
TABLE: Imports By Product
30
Chapter 5: Key Sectors
33
Oil & Gas
33
TABLE: Oil Production, 2012-2017
34
TABLE: Oil Production, 2018-2023
34
Retail
37
TABLE: Headline Retail Sect or Spending
38
Other Key Sectors
41
TABLE: Autos Sector Key Indicators
41
TABLE: Food & Drink Sector Key Indicators
41
TABLE: Defence & Security Sector Key Indicators
41
TABLE: Telecoms Sector Key Indicators
42
TABLE: Pharma Sector Key Indicators
42
TABLE: Infrastructure Sector Key Indicators
42
TABLE: Freight Key Indicators
42
Chapter 6: BMI Global Assumptions
43
Global Outlook
43
Reality Check: Uncertainty Reigns
43
Table : Global Assumptions
43
Table : Developed States , Real GDP Growth, %
44
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
44
Table : Emerging Markets , Real GDP Growth, %
45

The Venezuela Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Venezuela and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Venezuela's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Venezuela's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Venezuela's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Venezuela, including currency volatility, the commodity price boom and protectionist policies.

The Venezuela Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Venezuela economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Venezuela through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Venezuela Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Venezuela and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Venezuela, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Venezuela over the next 5-years?

BMI's Venezuela country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Venezuela Market - Political Strengths, Weaknesses, Opportunities and Threats facing Venezuela.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Venezuela's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Venezuela's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Venezuela, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Venezuela's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Venezuela will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Venezuela's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express