New Market Report Now Available: Venezuela Business Forecast Report Q2 2013

New Country Reports research report from Business Monitor International is now available from Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 19 February 2013

Core Views - In the event of fresh presidential elections, we believe the ruling party would win, as a poor performance by the opposition in the December 2012 regional elections suggests waning support. Social tensions in Venezuela will remain elevated in a post-Chavez era.

An elevated fiscal deficit, rampant monetary stimulus, and an ongoing deterioration of foreign reserves will likely lead to currency devaluation in 2013.

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

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We have revised up our 2012 real GDP growth estimate to 5.3%, from 4.7% previously, prompted by a significant data revision by the central bank which shows that the economy expanded by 5.6% year-on-year in the first three quarters of 2012.

Key Risks To Outlook

Upside Risks: Higher than expected oil prices and more aggressive monetary stimulus could see real GDP growth exceed our 2.6%

forecast in 2013.

Downside Risks: The potential for elevated political tensions to materialise in a wider political crisis, particularly once President Chavez is out of the picture, poses a significant downside risk to our growth forecast.

Partial Table of Contents:

Executive Summary

Core Views

Major Forecast Changes

Key Risks To Outlook

Chapter 1: Political Outlook

SWOT Analysis

BMI Political Risk Ratings

Domestic Politics

Political Instability To Heighten After Chavez

- Venezuela's political trajectory will remain highly uncertain as President Hugo Chavez's ongoing illness prevents him from attending the inauguration of his fourth term on January 10. However, we believe that the ruling party will take steps to extend Chavez's legacy as long as possible, in order to maintain political stability and dominance over the country's institutions. That said, we do not rule out a more extensive political crisis, with the potential for military intervention, as political and social tensions are set to heighten in the near term.

TABLE: LOOKING BEYOND CHAVEZ

TABLE: POLITICAL OVERVIEW

Long-Term Political Outlook

- The Venezuelan political landscape will very likely remain polarised over the next 10 years, with potential for pent-up tensions to lead to unrest. Although it is becoming increasingly clear that President Hugo Chavez's time in office is coming to an end due to his worsening health, we anticipate a continuation of his policies in the near-to-medium term. However, a gradual shift to more business-friendly policies in the long term cannot be ruled out, though it would likely not be a smooth transition.

Chapter 2: Economic Outlook

SWOT Analysis

BMI Economic Risk Ratings

Economic Activity

Growth To Halve In 2013, With Substantial Downside Risks

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