Venezuela Economy To Shrink 25% In 2020: IMF

(Energy Analytics Institute, 13.Oct.2020) — Venezuela, home to the world’s largest oil reserves and sizable natural gas and mineral deposits, is expected to be the worst performing economy in the Latin America and Caribbean (LAC) region with its gross domestic product (GDP) projected to contract 25% in 2020, according to a new study by the International Monetary Fund (IMF).

Guyana, the LAC region’s newest petrostate, is the only economy expected to grow this year and at a whopping 25% (see tables below).

“Projecting the economic outlook in Venezuela, including assessing past and current economic developments as the basis for the projections, is complicated by the lack of discussions with the authorities (the last Article IV consultation took place in 2004), incomplete understanding of the reported data, and difficulties in interpreting certain reported economic indicators given economic developments,” the IMF said in its October 2020 report titled World Economic Outlook: A Long And Difficult Ascent.

“The fiscal accounts include the budgetary central government; social security; FOGADE (insurance deposit institution); and a sample of public enterprises, including Petróleos de Venezuela, S.A. (PDVSA); and data for 2018–19 are IMF staff estimates. The effects of hyperinflation and the paucity of reported data mean that the IMF staff’s projected macroeconomic indicators need to be interpreted with caution. For example, nominal GDP is estimated assuming the GDP deflator rises in line with the IMF staff’s projection of average inflation. Public external debt in relation to GDP is projected using the IMF staff’s estimate of the average exchange rate for the year. Wide uncertainty surrounds these projections. Venezuela’s consumer prices are excluded from all WEO group composites.”

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By Piero Stewart. © Energy Analytics Institute (EAI). All Rights Reserved.