Country Economic Forecasts > Venezuela

A leak from the central bank puts the annual inflation rate at 150% in August. And it is very likely that inflation will continue to accelerate in the coming months amid widespread scarcity of goods, soaring money supply, and the collapse of the bolivar in the parallel market (currently at over VEB700). We now expect CPI inflation to end 2015 around 200% (150% previously), and to average 140% next year. We think that GDP will shrink a further 4% in 2016, following a 6% fall this year.We are pencilling in a modest rebound in 2017 that gathers pace in 2018 but this assumes a turnaround in economic policy and the absence of serious political instability. And this could be over-optimistic. Indeed, rather than addressing the massive economic distortions at home, the government has closed the border with Colombia since mid-August and expelled thousands of illegal immigrants in an attempt to curb the smuggling of subsidised goods. The measure has created a diplomatic crisis and has disrupted key bilateral trade flows.