Business Monitor International


Venezuela Business Forecast Report

Published 22 July 2014

  • 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.

  • 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. However, a series of currency devaluations has begun to ease fiscal pressures.

  • 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 fiscal deficit forecast for 2014 and 2015, following a downward adjustment by our Oil & Gas team for crude production, to 6.7% of GDP and 6.5% of GDP respectively, compared to our previous projections of 6.5% and 6.2%.

  • We have incorporated our view that currency unification will occur in 2015, reflected in our forecast for the official exchange rate to reach VEF25.00/USD that year, compared to the current rate of VEF6.292/USD.

Key Risks To Outlook

  • Upside Risks: Higher than expected oil prices and more investor-friendly policies could see real GDP growth exceed our forecast.

  • 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.

Macroeconomic Forecasts (Venezuela 2012-2015)
Indicator 2012 2013e 2014f 2015f
Real GDP growth, % y-o-y 5.6 1.3 0.5 1.2
Nominal GDP, USDbn 380.8 361.1 509.4 278.7
Consumer price inflation, % y-o-y, eop 20.1 56.2 49.0 30.0
Exchange rate VEF/USD, eop 4.29 6.29 6.29 25.00
Budget balance, % of GDP -4.9 -9.8 -9.0 -3.7
Current account balance, % of GDP 2.9 2.2 1.5 3.4

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 Ratings
7
Domestic Politics
8
Protests To Persist As Opposition Gains Ground
8
Table: Political Overview
8
Long-Term Political Outlook
9
Post-Ch-vez Era To See Greater Turbulence
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
GDP Growth Constrained On Multiple Fronts
14
TABLE: Economic Activit y
14
Balance Of Payments
15
Export Stagnation To Weigh On Current Account
15
TABLE: Current Account
16
Fiscal Policy
17
Falling Revenues To Temper Fiscal Consolidation
17
TABLE: Fiscal Policy
17
Exchange Rate Policy
19
Currency Unification To Be Delayed Until 2015
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: Business Environment
23
SWOT Analysis
23
BMI Business Environment Risk Ratings
23
Business Environment Outlook
24
Institutions
24
Table : BMI Business And Operati on Ris k Ratings
24
Table : BMI Legal Framew ork Rating
25
TABLE: LABOUR FORCE QUALITY
26
Market Orientation
27
TABLE: LATIN AMERICA - ANNUAL FDI INFLOWS
27
TABLE: Top Export Destinations
28
Operational Risk
29
Chapter 5: Key Sectors
31
Pharmaceuticals & Healthcare
31
TABLE: Pharmaceutical Sales , Hist orical Data And Forecasts
32
TABLE: Healthcare Expenditure Trends , Hist orical Data And Forecasts
32
TABLE: Government Healthcare Expenditure Trends , Hist orical Data And Forecasts
33
TABLE: Private Healthcare Expenditure Trends , Hist orical Data And Forecasts
33
Telecommunications
34
TABLE: Telec oms Sect or - Mobile - Hist orical Data & Forecasts
34
TABLE: Telec oms Sect or - Wireline - Hist orical Data & Forecasts
35
TABLE: Telec oms Sect or - Internet - Hist orical Data And Forecasts , 2011-2018
36
Chapter 6: BMI Global Assumptions
37
Global Outlook
37
Global Recovery Still On Track
37
Table : Global Assumpti ons
37
Table : Devel oped States , Real GDP Growt H, %
38
Table : BMI VERSUS BLOO MBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
38
Table : Emerging Mar kets , Real GDP Growth , %
39

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