LATAM THIS WEEK Monday, July 29, 2019
VENEZUELA EXPORTS PLUNGE TO NEW LOW Venezuelan exports fell to USD 1.1bn in May, a 37% m-o-m and 58% y-o-y decline, to the lowest levels yet reported in the data. The data shows China cutting back purchases and would correspond to an annualized level of USD 13.2bn over the next twelve months. Although preliminary June data suggests that part of the decline may revert, the numbers still point to a much higher than expected decline in foreign revenues. PAGE #4
WHAT TO WATCH THIS WEEK
VENEZUELAN IMPORTS RECOVER BUT REMAIN NEAR HISTORIC LOWS Venezuelan imports broke a four-month streak of declines and rose 16% m-o-m to USD 351mn. However, they declined 53% y-o-y, the same rate of decline as in April, and the seasonally-adjusted m-o-m increase was only 4%, suggesting that any recovery is likely due only to seasonal factors. Import levels remain near their historic lows and the continued decline from last year’s levels suggest supply conditions are likely to continue to worsen. PAGE #10
VENEZUELA: MEASURING UP We review the Central Bank’s May data releases and compare them against our forecasts as well as those of other organizations. While the extent of the GDP contraction was similar to what was expected, the price data confirms our view that the seven-digit price increases reported by the National Assembly were improbably high. Trade and foreign debt results are also in line with our expectations PAGE #13
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MACROECONOMIC FORECAST TABLES
New national blackout hits Venezuela. CITGO issues USD 1.4bn to refinance upcoming amortization. U.S. renews Chevron’s license to operate in Venezuela. Ecuador to require visas from Venezuelan immigrants. Ecuador to bring alternative energy projects for tender. Clarin shows Fernández’s lead narrowing in poll averages. Brazil COPOM meeting starts today. Brazil government to continue pushing for individual accounts: Guedes.
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WHAT TO WATCH THIS WEEK VENEZUELA ECUADOR
A nationwide blackout occurred last Monday at around 4:40 pm, following more than three months of relatively stable electrical supply in the capital after the March-April nationwide blackouts. Twenty-two of the country’s 24 regions were affected. The U.S. renewed Chevron’s license to operate in Venezuela despite sanctions. The license has been extended up until October 25, following threats by the Maduro administration to seize Chevron’s assets in Venezuela if the license was not renewed. The Times of India reported that Nayara Energy imported a record 225tbd of Venezuelan oil in June, up 67.3% m-om from May. Nayara Energy is partly owned by Russian oil company Rosneft, and the newspaper claimed that most of this oil was supplied by Rosneft itself. After the opposition-controlled National Assembly approved Venezuela’s return to the Inter-American Treaty of Reciprocal Assistance (TIAR) last Tuesday, de facto President Nicolás Maduro said his government would consider the triggering of the treaty “a hostile act.” The TIAR is a mutual defense pact between countries in the hemisphere, allowing them to join in prevention and response to any threat. De facto President Nicolás Maduro said former Colombian guerrilla commanders Iván Márquez and Jesús Santrich would be “welcome in Venezuela.” Both Márquez and Santrich disappeared recently and are being sought by Colombian justice. Colombian President Ivan Duque had recently suggested that both were hiding in Venezuelan territory. Last Wednesday, Citgo Holding announced that it priced USD 1.370 billion aggregate principal amount of 9.25% senior secured notes due 2024 in a private offering. The issuance intends to rollover a USD 1.9bn bond maturing in February. It was issued at par, with a coupon of 9.25%.
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On Wednesday, the Central Bank of Ecuador is scheduled to publish the 2Q19 labor market report. Figures for the previous 1Q19 had shown an increase in unemployment to 4.6%, the highest in five quarters and a sharp increase from the 3.7% of 4Q18. Energy Minister Carlos Pérez announced that Ecuador would be setting up alternative energy projects for public tender next Tuesday, under conditions which would allow contractors to invest, build, and operate the projects for a pre-established amount of time and then transfer project property to the State. One hydroelectric, two solar and three wind energy projects will be put up for tender. A presidential decree published on Thursday imposed visa requirements on Venezuelan migrants. Notably, the decree includes a 30-day grace period which will last until August 25. It also seeks to regularize Venezuelan migrant population by March 2020, granting a general amnesty to those who are already within Ecuadorean territory so long as they accessed the country through regular means and have so far not committed any crimes in Ecuador. Last Thursday, the Office of the Prosecutor filed a request for a hearing in the National Court of Justice (CNJ) to charge 22 persons for their involvement in the payment of bribes between 2012 and 2016. Among the accused are former President Rafael Correa and former VicePresident Jorge Glass. On Frida, the Control and Oversight Commission of the National Assembly called for a third political trial of the President of the Citizen’s Participation and Social Control Council (CPCCS), José Tuárez. Tuárez is being accused of having participated in political activities prior to his election as CPCCS member.
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WHAT TO WATCH THIS WEEK ARGENTINA BRAZIL
The National Institute of Statistics and Census (INDEC) will release next Wednesday the May print for its monthly salary index. The Central Bank of Argentina (BCRA) will also be publishing its monetary base targeting report on Thursday as well as its Market Expectations Survey next Friday. After a relatively volatile week, the ARS/USD retail exchange rate depreciated by 2.0% to 44.52 ARS/USD on Friday 26 from 43.61 ARS/USD on Monday 22. This represents the lowest value for the currency in 38 days. In an interview for local news outlet El Destape, Kirchnerist presidential precandidate Alberto Fernández said that he would default on short term Leliq interest payments if elected, in order to increase salaries and pension benefits by 20%. He also claimed he would allow the ARS to depreciate so that it can “become more competitive and Argentina can export more.” Yesterday, Clarín reported that out of 19 polls conducted after June 22, 16 show the Alberto Fernández-Cristina Fernández presidential formula for the upcoming October 27 presidential election ahead in the polls, followed by the incumbent Mauricio Macri-Miguel Ángel Pichetto ticket. However, the report shows that the average difference between both formulas has become smaller: two weeks ago, Clarín had shown a 3.98% average advantage for the Fernández-Fernández formula while this most recent report estimates a 3.00% average advantage. 150 Argentinean intellectuals called for voting for the Macri-Pichetto presidential formula in a letter published last Friday. Vice-presidential candidate Cristina Fernández said during a stop on her book tour that “in terms of food supply we’re the same as Venezuela,” prompting a rebuke from members of the Venezuelan migrant community.
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Economy Minister Paulo Guedes defended on Friday once again the individual account savings system for social security proposed by the government but withdrawn by the Parliament. For Guedes, social security is a “black hole” that threatens to flood the country. He said that although lawmakers have withdrawn the proposal in the pension reform bill, the government will intend to continue trying to implement the regime. The National Treasury released on Friday the central government's fiscal report for June, showing that the central government registered a primary deficit of BRL 11.5bn (USD 3.0bn) during the month. The primary deficit in the first six months of the year was BRL 28.9bn (USD 7.6bn), an 8.4% improvement over the BRL 31.6bn (USD 8.4bn) primary deficit of the same period in 2018. State oil company Petrobras reported Friday that oil production rose 3.7% in q-o-q terms during the second quarter of the year, reaching 2,553tbd from 2,419tbd in the previous quarter; yet production fell 0.4% in y-o-y terms when compared to the 2,563tbd during the same quarter in the previous year. The Brazilian Institute of Geography and Statistics (IBGE) is scheduled to release on Wednesday the Continuous National Household Sample Survey (PNAD), which contains data of unemployment for the month of June. The IBGE is also scheduled to release on Thursday the Monthly Industrial Survey containing data on June industrial production. The Central Bank’s Monetary Policy Committee (COPOM) is scheduled to begin its two-day meeting today. The Selic rate currently stands at 6.5% and has been unchanged since March 2018. The decision on the reference rate will be announced on Wednesday afternoon, while the minutes will be published on August 6.
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VENEZUELA May exports plunge to historic lows as China cuts purchases The dollar value of Venezuela’s external sales declined to their lowest level yet seen in May, after having shown a moderate price-led recovery in April. This is the main conclusion that emerges from our analysis of data for 31 1 trading partners that account for the bulk of the country’s external trade. Our series shows May exports from these partners at USD 1.11bn, declining by 36.9% from their April levels yet falling by 58.0% on a year-on-year basis and 53.0% from their levels in January, the month at the end of which oil sanctions were imposed on the country.
compared to the 2018 level of USD 31.9bn in our index of 31 countries. Since our estimate reflects the behavior of imports in a subset of countries, as well as due to other methodological reasons, 2 the aggregate level of imports does not correspond exactly with that reported in the goods balance of the central bank’s external accounts data. If we take as our starting point the central bank’s reported USD 33.7bn in exports, then we would derive 2019 export estimates of USD 13.2bn, USD 17.7bn and USD 22.0bn, respectively.
May exports
This monthly level of exports would fell to USD Brent crude prices fell slightly by 0.9% between correspond to an annualized figure of USD April (average USD 71.2/bl) and May (USD 1.1bn, the 12.4bn if the May rate of y-o-y decline with 70.5/bl average), as the disruption concerns lowest figure respect to the corresponding month of 2018 over Venezuelan and Iranian supply continued ever seen in were to be sustained over the next twelve to be present. The Venezuelan oil basket the data. months. If we focus just on the 2019 forecast behaved similarly, falling 0.3% in May (at a and assume that the y-o-y rate of decline is monthly average of USD 64.4/bl) compared replicated in the remaining seven months of with April (at a monthly average of USD 64.7/bl). At our the year, exports for the year as a whole would reach estimated level of Venezuelan oil exports in May USD 16.8bn. Alternatively, if we assume that the (412tbd), this price increase would imply an increase in average rate of y-o-y decline observed in the first five revenues of USD 34.3mn per month. In contrast, the loss months of the year replicates itself in the last seven months, then export levels would reach USD 20.8bn. in volume observed in May would mean a loss of These three scenarios would imply respectively average revenues of USD 595mn per month, 17 times as large as declines of 61%, 47%, and 35%, respectively when the price gains.
The E-31 Export Index uses data from the Argentina, Brazil, Canada, Chile, China, Colombia, Costa Rica, Czech Republic, Ecuador, El Salvador, France, Germany, Hong Kong, India, Israel, Japan, Malaysia, Mexico, Norway, Paraguay, Portugal, Russia, Republic of Korea, Singapore, Spain, Sweden, Taiwan, Turkey, United Kingdom, Uruguay and United States. Sweden had not yet released its bilateral trade data for April at the time of publication of
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this report, so we approximate it extrapolating the March observation using the average m-o-m April growth rate of the last three years. Since Sweden accounts for only 1% of Venezuelan exports, this extrapolation makes little difference to the aggregate numbers. 2 See the discussion in footnote 4 on CIF/FOB data.
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An accurate picture of Venezuela’s trade balance is fundamental for understanding the evolution of the country’s capacity to generate economic growth, provide an adequate supply of goods and services to the domestic economy, and continue servicing its external debt. While Venezuela’s Central Bank recently released a trove of macroeconomic data, including external accounts data to 4Q18, it has yet to publish any numbers for this year. In the absence of updated official data, we use bilateral trade data from 31 of This decline in shipments to China would Venezuela’s trading partners. These 31 countries, 73% of appear to be at odds with the tankeraccounting for 87.1% of Venezuela’s total exports in tracking data, which actually shows a 29% exports, report and regularly update bilateral May went to m-o-m increase in the volume of shipments trade data on a monthly basis, allowing us to China and to China. There is, however, an asynchrony generate a reasonable picture of the export side India. between the tanker-tracking data and the of Venezuela’s foreign trade. Our series has a .98 export data, with the latter registered correlation with the exports data from the when the goods are recorded in customs as having current account in levels and a .94 correlation in growth entered the country. Thus, the May export data seems rates. to be more consistent with the tanker-tracking April decline of 34%. In fact, both the May tanker data and The largest importers of Venezuelan goods in May were China and India, according to our estimates. Imports by the June export data (available for China but not for all these countries account for 37.7% and 34.8%, the countries necessary to build our index) show recoveries. It is also worth considering that tanker respectively, of the total exported goods during this month, shares that are respectively 14.7 and 11.6 tracking data capture the volume of trade in percentage points higher than in 2018. In contrast, the heterogeneous goods and that if oil to China is being share of exports going to the U.S. fell from 41.5% of all sold at a deeper discount, then we would expect to see larger declines in export proceeds than in the volume of exports in 2018 to only 4.3% in May 2019, a 37.2pp decline. barrels sent. 3 The decline in exports is strongly influenced by a fall in exports to China, which declined by 46% m-o-m from USD 782mn in April to USD 419mn in May. The April number, however, had been unusually high and may have reflected the clearing of supply bottlenecks as oil was redirected to China from other initially intended purchasers. The May level of exports to China also represents a 49% decline with respect to the USD 816mn exported to China in May of 2018.
Venezuela's oil exports drop 17% in May as sanctions kick in: data. Reuters. June 4, 2019. 3
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Table 1: Exports to 31 trading partners, 2012-19 (USD mn)
Source: Torino Economics, National Statistical Agencies
In the absence of data, it is common to find export estimates used for assessment of the country’s macroeconomic perspectives based on estimates of oil production and prices plus ad hoc assumptions about domestic consumption and non-oil exports. Even if the production and price assumptions in those estimates are correct, there is significant room for error coming from the other variables in this calculation. One word of caution is in order with respect to the interpretation of the absolute figures. Since import data is typically reported inclusive of freight charges (i.e., in CIF terms, which stands for Cost, Insurance and Freight), the absolute level of the series will typically be higher than the value of exports typically reported by the sender country (which is reported in FOB – free onboard – terms). Therefore, it is not strictly speaking correct to extrapolate the levels from our export series to the balance of payments data. Nevertheless, in practice, the difference is small, as our estimates suggest that
We use the share of trade with the 31 countries in our series in all trade reported to the United Nations’ COMTRADE database to estimate this ratio. An alternative is to use the percentage accounted by these countries of total Venezuelan FOB exports in the last year in which the Central Bank reported this data, which was 2018. See Central Bank of Venezuela’s General
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around 3% of the level of our series represents insurance and freight costs. 4 Nevertheless, for these reasons, we recommend focusing on the changes over time in our series as the best indicator of the evolution of exports. The contrary effect is present in the import data, in which the absolute level of our series is typically lower than that reported in the balance of payments statistics. Therefore, it is not correct to try to read the trade balance from the difference between exports and imports in our two series. The value of Venezuela’s exports in May is 83.3% lower than at its peak in 2012. It is the lowest yet registered volume of monthly exports in our series, which begins in January of 2010. Seasonally adjusted data shows a somewhat lower 34.1% contraction. The difference between the seasonally-adjusted and the nonseasonally-adjusted data must be interpreted cautiously, as it is doubtful that typical seasonal Summary of Venezuela’s Balance of Payments, even though our series accounts for 90% of exports, we find that the absolute level over the last four quarters for which there was comparable BCV data (4Q18), was almost identical to that reported by the BCV, despite the fact that countries representing 5.8% of Venezuela’s trade are excluded from the series.
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LATAM THIS WEEK patterns are operating in the Venezuelan economy right now given the major changes to trade patterns as a result of sanctions. On year-on-year terms, the seasonally adjusted series also shows a 57.3% drop, in line with the decrease in the non-seasonally adjusted series.
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partner. The value of all exports from Venezuela to the United States declined by 72.2% m-o-m in May, after having increased 8.4% m-o-m in April but also having declined by 84% between January and March period. Crude oil exports to the U.S fell 84.5% m-o-m in May after rising 11.2% m-o-m in April, suggesting that firms tried to take advantage of the wind-down period which expired on April 28. Oil exports to the U.S. in May were 97.4% lower than they were one year ago. It is striking that 48.2% of Venezuelan exports to the U.S. are still from oil (as opposed to 94.8% one year ago), suggesting that sanctions have also impacted non-oil trade strongly. The fact that this remainder exists suggests that sanctions exemptions and licenses do still leave a role for some limited oil trade. Nevertheless, this observation should not obscure the result that total exports to the U.S. have fallen by 95% from last year.
Source: Torino Economics, National Statistical Agencies
The recovery observed in the previous month did not last into May, as the period for U.S. firms to close ongoing dealings with PDVSA expired on April 28. Eleven out of the 31 countries in our index have so far reported data on their June imports – Brazil, Chile, China, El Salvador, India, Israel, Norway, Paraguay, Singapore, South Korea, and Taiwan. Exports to these countries showed a 25.4% m-o-m increase in June, suggesting that some recovery is to be expected. The print is also 22.2% lower than the average value of exports in 2018 to these trading partners, but this largely reflects the fact that the largest source of decline in exports has been the U.S. market, which is excluded from this preliminary series. The increase observed in June was driven by a USD 134.2mn (34.7% m-o-m) increase in exports to India and USD 75.8mn (18.1% mo-m) increase in exports to China.
Source: Torino Economics, National Statistical Agencies
If we use the price of the Venezuelan basket to infer export volumes, we find that the economy exported on average 771tbd in the first four months of the year, down from 1,025tbd in the same period of 2018 (Table 2).
Data on trade with the United States allows us to get a clearer picture of the interactions with a key trading
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Table 2: Oil exports estimate volume, price and quantity estimates 2016 Oil exports (USD mn) Non-oil exports (USD mn) Venezuelan oil basket (USD/bl) Oil exports (avg tbd) Total
25,942 1,461 35.4 2,007 27,403
2017
2018
32,437 1,511 46.6 1,390 33,948
34,090 2,451 63.8 1,065 36,541
Jan-May 2018 13,143 1,258 61.2 1,025 14,401
Jan-May 2019 9,085 875 57.3 771 9,960
% change 20182019 -30.9% -30.4% -6.3% -24.8% -30.8%
Source: Torino Economics, National Statistical Agencies
Table 3 shows the month-by-month estimates of export volumes implicit in our exports index, together with the production data reported to OPEC. In year-on-year terms, the secondary sources series shows a 46.0% decline in output (from 1,388tbd to 750tbd), much lower than the decline in our export series of 60.6% (from 1,046tbd to 412tbd). Meanwhile, between May and April, we estimate that export volumes declined by 314tbd (43.3%), above the decline in production reflected by the secondary sources’ series of the OPEC, which fell by 26tbd (3.4%) in the same period. 5 An interesting anomaly in the data is the fact that in some months our oil export volumes are slightly higher than one would expect based on the OPEC secondary source production series. In fact, there is even a month (August) in which our exports estimate exceeds OPEC secondary source production by 67tbd. In May, OPEC
5 It is possible that this difference is explained by the clearing of a backlog created in May and June due to the legal dispute with ConocoPhillips that led Venezuela to lose access to its storage facilities in the Caribbean. However, as we point out in our November 5 report Exodus, quantitatively the explanation appears insufficient. According to our volume estimates
secondary source production exceeded our exports estimate by 338tbd. If we take the official (direct communication) series, we will estimate domestic consumption at 638tbd, which appears unreasonably high. Venezuela’s last reported level of domestic consumption in 2016, according to PDVSA, was 510tbd so these numbers would suggest a substantial increase since. We expect the months ahead to continue to be difficult for the Venezuelan oil industry, as lack of availability of funds for investment and the end of the wind-down period come to weigh on its capacity to sustain levels of production. We now expect exports in 2019 to decline by 54.5% to USD15.3bn. This is somewhat higher than the USD 13bn that we were expecting one month ago, yet still, well below the USD 33.7bn we saw in 2018.
presented in Table xx, June oil exports were 999tbd, only 87tbd lower than May imports. But July and August exports were respectively 161tbd and 220tbd higher than May exports. In other words, the July and August surge of 381 barrels taken together is more than three times the magnitude of the possible June backlog.
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Table 3: Monthly oil exports estimate volume, production, price and quantity estimates
Source: Torino Economics, National Statistical Agencies, Oil ministry
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VENEZUELA Imports recover in May but remain near historic lows Venezuela’s imports recovered in May after implies that there is almost no capacity for Venezuela’s falling for four months in a row and reaching in April government to carry out commercial transactions that their lowest level seen since the start of our data. This involve international financial transactions with U.S. is the result that emerges from our proprietary import exporters. index based on data from 31 of the country’s trading partners. The May print shows an increase of 15.8% m- Given the paucity of available data and information, imports may be one of the best available proxies for the o-m yet a 53.0% decline y-o-y. However, the USD evolution of living standards in Venezuela. 351mn in May’s foreign purchases is well Historically, import levels have been below the USD 846mn (-58.7%) average of Imports rose in strongly related to economic growth – 2018. Moreover, May’s recovery comes after m-o-m terms to particularly in the non-oil sector – as the a massive decline of 50.3% between January USD 351mn but economy tends to be composed of – the month in which U.S. sanctions were maintained the y- activities related either to the sale of imposed on the country – and April. o-y rate of imported consumption goods or to decline of April. domestic production that uses imported Sanctions have broad-ranging effects on intermediates and capital goods. Venezuela’s capacity to trade with the Considering this, the data suggests that United States. They ban most U.S. businesses from engaging in transactions with its state-owned oil domestic demand continues on its downward trend. company PDVSA. They also prevent U.S. suppliers from selling refined products such as gasoline and diluents These results are based on our I-31 imports index, a necessary for Venezuela to process its heavy crude. composite import indicator using data from 31 trading partners that report monthly trade data disaggregated Apart from Venezuela's oil industry, its banking sector by the destination country. We have built this index to has been targeted by U.S. sanctions, making it difficult for companies and banks that do business with the fill the void left by the delay in providing official imports or balance of payments data. 6 Notably, the USD 351mn United States to carry out the transactions that are incidental yet necessary for trade to take place. The fact figure observed in May is considerably below the USD that Venezuelan government accounts have been 4.3bn that the country was importing back in May of blocked or transferred to the Guaidó administration 6 Venezuela’s Central Bank hasn’t published balance of payments information since 4Q of 2018. In the absence of updated official data, we constructed the I-31 Import Index based on bilateral trade data from 31 trading partners, which represent 69% of Venezuelan imports. The series has a 0.94 correlation with total import levels and 0.93 with year-over-year import growth. The I-31 Import Index uses data from the United States, China, Brazil, Argentina, Mexico, Colombia, Germany, Canada, Spain, Chile, Ecuador, United Kingdom, France, Japan, Uruguay, India, Russia, Costa Rica,
El Salvador, Republic of Korea, Hong Kong, Czech Republic, Norway, Paraguay, Israel, Malaysia, Portugal, Singapore, Sweden, Turkey and Taiwan. Sweden had not yet released its bilateral trade data for April at the time of publication of this report, so we approximate it extrapolating the March observation using the average m-o-m April growth rate of the last three years. Since Sweden accounts for only 0.4% of Venezuelan imports, this extrapolation makes little difference to the aggregate numbers.
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2012, showing a 91.9% drop in imports over the last six years. Imports averaged USD 383mn in the first five months of 2019, 10.1% of the USD 3.8bn that they averaged during the comparable period of 2012. A longer-run look at the historical import series suggests that this year’s per capita real imports so far are at their lowest since at least 1946 and 57.3% lower than at their previous low in 1990. Seasonal effects could be partly driving this increase – although we would here once again caution as to the interpretation of seasonal effects with a rapidly changing composition of trade. The seasonally adjusted series shows a 3.8% monthly increase in May, contrary to the 15.8% m-o-m variation in the non-seasonally adjusted series (Chart 3). Nevertheless, the main result – that May and April import levels remain well below anything that the country had ever seen before – continues to hold unequivocally. As with the nonseasonally adjusted series, imports declined 53.0% y-oy in May. In May, China was the largest exporter to Venezuela, replacing the United States, which continues to be an important exporter to Venezuela. Imports from China amounted USD 100mn, a 43.9% m-o-m increase, and an 87.0% y-o-y increase. In contrast, May imports from the U.S. amounted only to USD 77.9mn, a 2.0% m-o-m increase and 82.9% lower than their level in May of last year. The U.S. is still the second most important source of Venezuelan imports, with Mexico (USD 38.7mn) and Brazil (USD 26.2mn) coming in third and fourth. Imports from non-U.S. partners increased by 20.4% m-o-m but fell 5.9% from May 2018 levels.
Source: Torino Economics, National Statistical Agencies.
The U.S. International Trade Commission reports monthly data of U.S. exports of crude oil and petroleum products to Venezuela. The data is available until May. We find that imports of crude oil and petroleum products from the U.S stood at USD 4.3mn, 98.7% lower than the average 2018 level and falling 98.0% from the January levels. Moreover, imports of crude oil and petroleum products represented in April 5.6% of total imports from the U.S., much less than the 67% average seen in 2018. Oil imports from the U.S. clearly collapsed after the imposition of U.S. sanctions. Though some residual level remains, this appears to reflect either trade that has received U.S. approval through the issuing if specific licenses, or oil-related goods that do not qualify strictly speaking as oil products from the standpoint of sanctions. This series also allows us to infer non-oil imports from the United States. Non-oil imports from the U.S. stood at USD 73.5mn in May, representing a m-o-m increase of 3.4% but a 62.0% y-o-y contraction. This suggests that oil trade has been far more affected by sanctions, but non-oil trade has also been considerably hit.
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We now expect imports in Venezuela to reach only USD 9.6bn this year, a 35.4% decline from 2018, and a decline of 85.9% between 2012 and 2019. This is a significant upward revision (57.5%) from our last forecast of USD 6.1bn. To fix ideas about the meaning of this number, if all of those USD 9.6bn were spent on food and medicines (i.e., zero imports of any other goods such as oil products or machinery for the electric sector), that would only be enough for paying 62% of what the country purchased in food and medicine imports in 2013.
Source: Torino Economics, EIA
Eleven countries in our index have so far reported data on June imports – Brazil, Chile, China, El Salvador, India, Israel, Norway, Paraguay, Singapore, South Korea, and Taiwan. Imports from these countries show a 2.8% mo-m increase in June, but still, show an 8.9% year-onyear decline from the June 2018 levels. This monthly increase is mainly driven by China’s contribution to the hike of imports (7.2%), as well as those of India (85.7% m-o-m).7 Nevertheless, these numbers have to be interpreted with caution as these countries account for only 30.7% of all Venezuelan imports.
Source: Torino Economics, EIA
Table 4: Imports from 31 trading partners, 2012-19 (USD mn)
Source: Torino Capital, National Statistical Agencies
These percentages sum higher than 100% because some trading partners had negative contributions.
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VENEZUELA Measuring up On Wednesday, May 28, Venezuela’s Central Bank (BCV) released a suite of data covering most of the economy’s fundamental macroeconomic accounts. The release marked the first time the institution publishes key macroeconomic indicators such as GDP and inflation since 2016. The data blackout originated by mid-2012 when the Central Bank of Venezuela (BCV) started delaying the publishing of macroeconomic information without giving any explanation as to the reason, failing to comply with its own regulations. Starting in 2015, the BCV stopped publishing inflation, economic performance, the balance of payments altogether, as well as all other macroeconomic data, except a few monetary indicators and international reserve figures. The Central Bank law was amended through executive decree in 2015 to allow the Central Bank to suspend publication of data that its board deems sensitive indefinitely, and by 2016 the bank altogether stopped publishing new data. The Venezuelan government did continue reporting some broadly aggregated data to third parties such as
the International Monetary Fund (IMF) and U.S. Securities Exchange Commission (SEC), but the low frequency of updates, as well as the low level of disaggregation and the unavailability of certain indicators, led to other third parties filling in the gaps by preparing a vast array of private estimates. Generally, there are good reasons to prefer official data to alternative estimates. An important consideration is the high economic cost and informational requirements of official data collection, which make private estimates usually based on short cuts and approximations. Furthermore, there is as of yet little indication that the NicolĂĄs Maduro administration has tampered with the data that it has published. Nonetheless, we believe that significant uncertainty remains regarding the future availability of updated data while the Maduro administration remains in power, giving latitude for alternative estimates to remain valuable. In this section, we look at the released data and compare it with our own forecasts in order to assess the quality of our estimation models.
Table 5: New and previous data releases, latest data-point
Source: Torino Capital, National Statistical Agencies
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LATAM THIS WEEK GDP On May 28, BCV released 12 quarters of previously unavailable GDP growth data. The quarterly periodicity of the released information is in itself an upgrade, as the data reported to third parties, such as the IMF and SEC, was of an annual frequency. Furthermore, economic activity data in the May release is presented both under a supply-and-demand methodology, as well as on a GDP-by-sector disaggregation basis. This later aspect of the release provides information that was previously entirely unavailable on a systematic basis.
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The figures presented by the Central Bank confirm the magnitude of the Venezuelan crisis, at some points even surpassing private estimates as to its magnitude. While a widely known fact, it remains notable that the accumulated contraction between 2013 and 2019 – registered by Venezuela during relatively peaceful times – is only comparable to that reported by countries undergoing devastating armed conflicts.
For 2019, our advanced indicator for imports (the I-31, for which we provide updated figures in section “Imports recover in May but remain near The Central historic lows”) shows a 53.0% y-o-y decline Bank’s GDP data BCV’s headline GDP data shows that the up to May, while our corresponding economy contracted 52.4% between 3Q13 was in line with indicator for exports (the E-31, see section and 3Q18 (the latest available print). It also what was “May exports plunge to historic lows as shows that during the first three quarters expected, China cuts purchases”) shows a y-o-y of the year, the GDP contracted 19.4% y-oconfirming the decline of 58.0%. As a fully-specialized y. If the trend reported for the first three depth of the economy, Venezuelan economic activity is months were to extend to the fourth (and country’s collapse. strongly dependent on imports, which are GDP contracted 19.4% for the full year), the in turn only made possible by foreign figure would be higher in absolute value currency revenues generated by the oil industry. It thus than both the IMF estimate of -18.0% (available from follows that collapsing oil production – which had fallen the IMF’s WEO update of April 2019) and our estimate 44.6% y-o-y by June according to OPEC’s secondary of -16.6%. sources – can be expected to impact growth in a devastating manner. The March 2019 blackouts – which For previous years, the data shows that the economy contracted 6.2% in 2015, coinciding with the data that kept the country essentially frozen for 8.32 days on 8 the government had provided to the SEC. For 2016, the average – further contributed to worsening prospects, 9 data shows a slightly different print of 17.0%, in with long-lasting effects. Nonetheless, it is also worth contrast to the 16.5% reported to the SEC. For 2017, the highlighting that collapsing foreign trade (and, thus, data shows a 15.7% y-o-y contraction, coinciding with economic activity) was a predictable consequence of the January round of oil sanctions. 10 data available from the IMF’s April 2019 World Economic Update (WEO) release.
See our April 8 LatAm this Week report (“Venezuela: Darkness Falls”). “Refinerías Amuay y Cardón se quedaron sin energía eléctrica” [Amuay and Cardón refineries were left without electric power]. El Nacional. July 7, 2019. 8 9
10 See our January 28 Venezuela and Ecuador this Week report (“Presidential Standoff”) and Rodríguez, F. “Sanctions and the Venezuelan Economy: What the Data Say”. LatAm Economics Viewpoint, Torino Economics. June 2019.
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We began 2019 expecting an economic contraction of 11.8%, 11 but – on our January 28 report – we significantly reviewed our estimate down to 26.4% after the imposition of oil sanctions. We have subsequently updated our forecast on the face of later developments (notably the March blackouts) and now expect a 37.3% contraction of economic activity for the year. Up to recently, our estimate was markedly more pessimistic than that of the IMF, which forecasted a 25% contraction in its April 2019 WEO. Nonetheless, expectations appear to be converging to the morepessimistic view, as the IMF mid-period July’s update shows a much larger 35% decline. 12
In terms of the disaggregation of GDP data, the BCV release shows that the contraction in economic activity for the last 12 quarters was mainly driven by private consumption, gross fixed capital formation and imports of goods and services, which contracted 50.9%, 85.8%, and 70.1%, respectively. Exports of goods and services and government consumption also contracted 46.0% and 25.8%, respectively, during this period. During the first three quarters of 2018, the decline was also mainly driven by private consumption, exports of goods and services and gross fixed capital formation, which contracted 18.2%, 34.2% and 40.1% respectively, yet government consumption and imports of goods and services contracted by a lesser 9.5% and 0.1% during the first three quarters.
Table 6: Real GDP by expenditure (y-o-y) Gross domestic product Domestic demand Consumption Private consumption Government Consumption Gross fixed capital formation Exports of goods and services Import of goods and services
2015 -6.2% -11.8% -7.7% -8.9% -3.2% -20.4% -0.9% -23.1%
2016 -17.0% -26.3% -18.3% -19.4% -14.7% -45.1% -11.7% -50.1%
2017 -15.7% -21.1% -14.1% -16.2% -7.2% -45.3% 0.0% -34.7%
2018 -19.4% -14.3% -16.2% -18.2% -9.5% -40.1% -34.2% -0.1%
Source: Torino Economics, BCV
By and large, during the last 12 quarters, growth has declined across all sectors of the economy. The decline was large in both non-petroleum activities, which contracted 46.5%, and petroleum activities and other net taxes declined 44.9% and 55.1%, respectively. Within non-oil activities, the sectors that contributed the most to the decline were manufacturing, trade and financial intermediation services, which dropped
72.2%, 73.9%, and 92.1%, respectively, during the last 12 quarters. In the first three quarters of the year, the decline was also manly driven by non-petroleum activities, with the sectors of manufacturing, trade and financial institutions and insurance mostly contributing to the fall and contracting by 35.3%, 33.3% and 47.3%, respectively, during this period.
11 See our January 7 Venezuela and Ecuador this Week report (“Another year not to remember”).
12
“World Economic Outlook, July 2019”. IMF. July 2019.
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Table 7: Real GDP by industry (y-o-y)
Gross Domestic Product Oil GDP Non-oil GDP Mining Manufacturing Utilities Construction Commerce Transportation and storage Comunications Financial services Housing Non-profit services Government services Others
2015 -6.2% -0.9% -6.2% -6.1% -8.1% -3.1% -22.4% -12.6% -9.4% 2.8% -7.9% -3.4% -5.6% 1.0% -14.9%
2016 -17.0% -9.9% -16.9% -33.7% -26.6% -6.5% -41.9% -30.8% -23.2% -1.1% -34.7% -12.9% -15.2% -3.0% -25.8%
2017 -15.7% -15.3% -15.2% -7.5% -25.3% -5.3% -52.5% -32.8% -16.3% -1.8% -32.0% -10.4% -23.1% -4.6% -16.5%
2018 -19.4% -26.2% -18.4% 12.1% -35.3% -14.1% -55.3% -33.3% -27.1% -5.1% -47.3% -12.1% -44.4% -7.3% -17.4%
Source: Torino Economics, BCV
INFLATION Inflation was for years one of the most closely guarded macroeconomic secrets by the Maduro administration, as its effect on the wellbeing of the local population, as well as its acceleration into hyperinflation, made the data highly politically sensitive. As noted previously, CPI data had not been released since December 2015; nonetheless, the Venezuelan government had provided the information for 2016 to foreign third parties such as the SEC and IMF. Data for 2017 and 2018 had been elusive as the country descended into hyperinflation. The data remained completely unavailable up until the end of 2018 when the IMF put pressure on BCV’s authorities to provide the agency with statistics on the economic performance and the balance of payments. While the BCV did not publicly disclose this data, an article published by
Bloomberg at the time revealed that these figures put inflation at the end of 2017 at 860%, which broadly coincides with the latest official figures. 13 The lack of official data had prompted different third parties to prepare independent inflation estimates, which we evaluated on our February 11 LatAm this Week report (“Venezuela: Comparing Inflation Estimates”). BCV inflation figures considerably differ from the calculations made independently by the National Assembly (AN), which in the absence of data started compiling inflation figures for the country since 2017. The AN estimated y-o-y inflation at 2,616% and 1,698,488% in 2017 and 2018, respectively, in contrast to the 863% and 130,060% in 2017 and 2018, respectively, published by the BCV. Controversy regarding BCV inflation figures is – in fact – not particularly new. In June 2014, the Central Bank
13
Venezuela Is Said to Tell IMF That Inflation Hit 860% Last Year. Bloomberg. November 28, 2018
16
LATAM THIS WEEK updated the weights of its CPI components, in a decision that critics viewed as politically motivated; inflation for 2015 would have been of 241% under the old methodology, while it was reported at 181% under the new one. The large gap between the opposition-led National Assembly estimate and the officially reported figures may prompt some further skepticism. Nonetheless, as we pointed on our February 11 report, the convergence of other private sector indicators 14 to levels significantly lower than those presented by the National Assembly, led us to remain cautious regarding the informative value of the latter’s estimates. In fact, given the uncertainty around inflation figures in general, we had opted to adopt the geometric average of the National Assembly’s IPCAN and the m-o-m variation of CENDA’s (a non-governmental organization affiliated with the labor movement) basic consumption basket for deflating nominal figures into real ones. This gave a 2018 inflation of 494,578%, much lower than the NA’s 1,698,514% 15
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its CPI for 2018, which is much higher than the rest of the estimates.
Source: Torino Economics, BCV, Bloomberg, CENDA, Dolar Today
Despite BCV figures reporting inflation well below the estimates of the National Assembly, the official data still remains firmly in hyperinflation territory, showing that inflation peaked at 196.6% m-o-m in January 2019, and at 344,509.5% y-o-y in February 2019. FOREIGN TRADE
The availability of official data has prompted further review; it had now become apparent that CENDA’s basic goods basket is one of the better predictors of the BCV’s official CPI. Chart 6 shows the relationship between the two series. The index appears to have become more accurate as hyperinflation went into effect, as it overestimated the BCV by almost doubling inflation in 2017 but remained closer in 2018, presenting a 170 thousand percent increase in prices vs. the BCV’s 130 thousand. The National Assembly, on the other hand, presented a 1 million 699 thousand percent increase in
Foreign trade was another key macroeconomic indicator that was kept tightly under veil by the Venezuelan authorities, as the latest available figures from the BCV corresponded to 3Q15. As noted in our discussion of economic activity data, foreign trade figures provide a uniquely important indicator for the well-being of the Venezuelan economy. This led us to produce an aggregate indicator for imports and exports based on figures reported by Venezuela’s 31 main trading partners.
14 Such as CENDA’s basic basket, Bloomberg’s Café con Leche Index and our own Octavio Arepa Index.
15
BCV data available up to 4Q18 allows us to improve our judgment on the effectiveness of our indicator. Using quarterly data from 1Q10 to 3Q15, we find a 0.94 Such as minimum wages, fiscal revenues and expenditures.
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LATAM THIS WEEK correlation in levels between both series, and a 0.93 correlation in y-o-y variations. For the period between 3Q15 and 4Q18, we find a 0.94 correlation in levels and a 0.88 correlation in y-o-y variations. Correlations for the full period between 1Q10 and 4Q18 are of 0.98 in levels and 0.91 in y-o-y variations. Our index appears to be a reliable indicator – but not a perfect forecaster – of the BCV import data.
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that the average and standard deviation are of 1.27 and 0.10, respectively, if we exclude the 2Q18 outlier.
Source: Torino Economics, BCV
Source: Torino Economics, BCV
An interesting point in this regard is the direction of trade. As Venezuela became increasingly excluded from international markets from 2017 on, it is conceivable that it may have redirected trade towards other partners. We nonetheless find that the ratio of BCV total imports to our indicator (which covers the 31 main trading partners) has remained within a stable 1.00 to 1.51 range, except for 2Q18, when we found a 2.07 ratio. On average, we find that the ratio for the whole period is of 1.34, with a standard deviation of 0.16. If we break the sample into pre-3Q15 and post-3Q15 subperiods, we find an average of 1.33 with a standard deviation of 0.11 for the first subperiod, and an average of 1.35 with a standard deviation of 0.24 for the second one. This might indicate that trade has become more volatile since the previous BCV data release, but we find
Our exports indicator shows a similar behavior, with correlations with the BCV data for the whole period of 0.98 in levels and 0.94 on y-o-y variations. When broken down into subperiods, we find that the correlations were of 0.96 on levels and 0.96 on y-o-y variations between 1Q10 and 3Q15, and 0.72 in levels and 0.94 in y-o-y variations afterward.
Source: Torino Economics, BCV
It is notable that the ratio of BCV total exports to our indicator is on a narrower range for exports than for imports, implying that exports are more concentrated in a few trading partners than imports. The range for
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the whole period is between 0.93 and 1.39, with no outlier outside this corridor. The average ratio for the whole period is of 1.16 with a standard deviation of 0.13; when broken down, we find an average of 1.20 with a standard deviation of 0.12 up to 3Q15 and an average of 1.10 with a standard deviation of 0.12 afterward. This suggests that the concentration of imports has increased in our 31 partners.
of our estimates. It shows current account deficits of USD 16.1bn in 2015 and USD 3.9bn in 2016, and current account surpluses of USD 8.7bn in 2017 and USD 6.3bn in 2018. The latter two closely match our estimates of a USD 7.0bn surplus in 2017 and a USD 6.0bn in 2018.
As our trade indices provide coverage of only a subset of the full trading picture for Venezuela, we adjust them accordingly to produce an estimation of the country’s trade balance; we then complement this information with our estimates for the service, income and current transfer balances in order to produce a full current account balance estimate. Full balance of payments data up to 4Q18 was also released on May 28 by the central bank, and it allows us to judge on the precision
Source: Torino Economics, BCV
Table 8: Balance of payments (USD bn) Current Account Trade Balance Exports Imports Services Balance Income Balance Current Transfers Capital and Financial Account Direct Investment Portfolio Investment Other Investments Errors and Omissions Change in Reserves
2015 -16.1 3.9 37.2 33.3 -12.2 -7.7 -0.2 14.3 0.4 -3.3 21.1 -2.3 4.1
2016 -3.9 11.0 27.4 16.4 -8.2 -6.9 0.2 -0.1 0.0 -1.2 1.0 -2.8 6.8
2017 8.7 22.0 34.0 12.0 -6.3 -7.6 0.6 -7.0 -2.3 -0.4 -4.3 -2.2 0.5
2018 6.3 18.8 33.7 14.9 -6.5 -8.0 2.0 -1.5 0.2 0.4 -2.1 -3.8 -1.0
Source: Torino Economics, BCV
EXTERNAL DEBT Interestingly enough, the Central Bank’s initial data release on May 28 presented a set of data for external debt at nominal values in which public sector external debt on bonds and promissory notes fell 52.1% q-o-q in
1Q18 and 37.4% in 4Q18. Nonetheless, at some point afterward, the bank replaced the external debt file with one that shows a more stable evolution of the total stock of external debt by bonds and promissory notes (and, thus, of the total stock of external debt). BCV data
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disaggregates external debt broadly into public and private sector external debt, and then disaggregates these two broad categories into “Bonds and promissory In our 1H19 Red Book, we provided our estimate for the level and disaggregation of Venezuela’s external debt for the end of 2018. We also updated this information on our July 8 LatAm this Week report (“The Supercuts Team”), extending the estimate as of mid-2019. Our estimates indicated that the total stock of external debt was of USD 126.7bn 16 by the end of 2018 (against the USD 131.3bn published by the BCV). Notably, BCV data excludes obligations resulting from foreign court judgements against PDVSA or the Republic over expropriation charges during the Chávez and Maduro administrations, which we estimate at USD 20.5bn as of 1H19, and include Conoco Phillips, Crystallex, and Rusoro, among others. It is also likely to exclude past-due interest (PDI) on defaulted bonds and promissory notes issued by Venezuela, PDVSA or the Electricity of Caracas (ELECAR), which we estimate at USD 10.3bn.
notes”, “Money market notes”, “Commercial loans”, “Loans”, “Cash and deposits” and “Others”. We also provide estimates inclusive of resident holdings of foreign currency bonds, in contrast to the BCV decision (based on IMF methodology) that excludes them from external debt statistics. This point has become increasingly important as Juan Guaidó representatives issued a framework for the restructuring of the country’s debt committing to treating foreign and local holders equally. As of 1H19, we estimate these at USD 14.0bn plus USD 2.3bn in PDI owed to resident holders of this debt. We estimate that the three categories presented in the preceding paragraph call for an upward adjustment of BCV figures of 37.0bn, taking the total stock of public sector external debt to USD 168.3bn and the overall figure (inclusive of private sector external debt) to USD 188.2bn.
Table 9: Gross external debt according to BCV information (USD mn)
Source: Torino Economics, BCV
16
Deducting PDI and CIADI debt, which is not included in BCV figures.
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Table 10: Torino Economics extension of BCV debt statistics
Source: Torino Economics, BCV
Table 11: Forecast comparison table
Source: Torino Economics, BCV
Francisco RodrĂguez Chief Economist franciscorodriguez@torinocap.com Phone: 212-339-0021 (O), 917-275-2357 (M)
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MACROECONOMIC FORECAST TABLES Table 12: Venezuela Annual Economic Time Series and Forecasts, 2012-2020 2013 2014 Variable 2012 General indicators Nominal GDP (US$ bn) 351.8 224.6 180.6 GDP per capita (US$) 11,920 7,500 6,025 Unemployment rate (%) 7.8 7.5 7.0 Population (millions) 29.5 29.9 30.0 Output and aggregate demand components Real GDP growth (% yoy) 5.6% 1.3% -3.9% Domestic demand growth (% yoy) 12.3% -1.9% -8.8% Real investment growth (% yoy) 23.3% -9.0% -16.9% Real consumption growth (% yoy) 6.9% 4.4% -2.5% Real private consumption growth (% yoy) 7.0% 4.7% -3.4% Real government consumption growth (% yoy) 6.3% 3.3% 0.6% Real export growth (% yoy) 1.6% -6.2% -4.7% Real import growth (% yoy) 24.4% -9.7% -18.5% Prices, wages and exchange rates CPI inflation (Official Series, % yoy, eop) 20% 56% 69% CPI inflation (Official Series, % yoy, avg) 21% 41% 62% CPI inflation (National Assembly, % yoy, eop) CPI inflation (National Assembly, % yoy, avg) CPI inflation (CENDA, % yoy, eop) 19% 53% 86% CPI inflation (CENDA, % yoy, avg) 22% 33% 71% Minimum wages (% yoy) 27% 36% 68% Transaction-weighted average exchange rate (vs USD, avg) (1) 4.6 10.0 16.8 Transaction-weighted average exchange rate (vs USD, eop) (1) 5.1 17.0 32.1 Nominal exchange rate 1 (vs USD, eop) (1) 4.3 6.3 6.3 Nominal exchange rate 2 (vs USD, eop) (1) 5.3 11.3 50.0 Nominal exchange rate 3 - Parallel (vs USD, eop) (1) 16.4 64.1 173.1 Bilateral real exchange rate (% yoy, -depr, +appr) 12.3% -28.5% -0.3% Monetary and credit indicators Monetary base growth (% yoy) 55.3% 65.8% 70.4% Broad money growth (% yoy) 61.0% 69.7% 64.0% Central bank policy rate (%, eop) 29.5% 29.5% 29.5% Commercial bank lending rate (%, eop) 16.3% 16.0% 18.9% External accounts Current account balance (% of GDP) 0.7% 2.0% 2.6% Current account balance (US$ bn) 2.6 4.6 4.8 Trade balance (US$ bn) 31.9 31.6 27.4 Exports, f.o.b. (US$ bn) 97.9 88.8 74.7 Main export - Oil 93.6 85.6 71.7 Imports, f.o.b. (US$ bn) 66.0 57.2 47.3 Exports of services 2.2 2.2 1.9 Imports of services 19.4 19.3 16.9 Service balance (US$ bn) -17.2 -17.0 -15.0 Income balance (US$ bn) -11.1 -8.7 -7.4 Foreign direct investment (US$ bn) 0.9 2.5 2.1 International reserves (US$ bn, eop) 29.9 21.5 22.1 Price of main export commodity - oil (US$ per barrel) 103.1 101.1 87.6 Fiscal accounts Central gov. expenditures (% of GDP) 33.5% 33.9% 35.6% Central gov. revenues (% of GDP) 28.0% 31.8% 34.8% Central gov. primary budget balance (% of GDP) -2.4% 1.4% 2.0% Central gov. budget balance (% of GDP) -5.6% -2.1% -0.9% Restricted public sector expenditures (% of GDP) (2) 47.7% 49.8% 52.1% Restricted public sector revenues (% of GDP) (2) 30.7% 34.6% 43.0% Restricted public sector primary budget balance (% of GDP) (2) -13.1% -11.0% -5.2% Restricted public sector budget balance (% of GDP) (2) -17.0% -15.3% -9.0% Debt Indicators Gross external debt (% of GDP) 37.2% 58.9% 75.2% Public sector (% of GDP) 32.2% 49.9% 64.9% Private sector (% of GDP) 5.0% 9.0% 10.3% Central government debt (% of GDP) 28.5% 39.7% 43.5% Domestic (% of GDP) 15.6% 19.8% 19.5% External (% of GDP) 12.9% 19.9% 24.0% External debt amortizations (US$ bn) 7.3 10.3 11.7 External debt interest payments (US$ bn) 6.5 6.8 6.6 External debt service (% of XGS) 13.8% 18.7% 23.9% Savings - Investment Balance Savings (% of GDP) 19.7% 13.0% 3.2% Investment (% of GDP) 20.3% 22.2% 21.6% (1) Exchange rate data shown in the VES denomination from 2018 onwards to improve readability. 1 VES = (2) Restricted public sector includes central government plus PDVSA
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2015
2016
2017(E)
2018 (E)
2019 (F)
2020 (F)
121.9 4,010 6.8 30.4
115.0 3,818 7.1 30.1
86.5 2,974 7.9 29.1
72.3 2,668 8.0 27.1
74.4 2,852 8.5 26.1
88.1 3,402 9.0 25.9
-6.2% -11.8% -20.4% -7.7% -8.9% -3.2% -0.9% -23.1%
-17.0% -26.3% -45.1% -18.3% -19.4% -14.7% -11.7% -50.1%
-15.7% -21.1% -45.3% -14.1% -16.2% -7.2% 0.0% -34.7%
-18.1% -16.8% -39.9% -16.4% -18.6% -9.7% -39.7% 7.8%
-37.3% -33.9% -21.2% -34.1% -33.2% -36.5% -48.2% -50.9%
4.6% 8.0% 8.0% 4.5% 3.9% 6.4% 15.0% 38.4%
181% 122%
274% 255%
863% 438% 2,586%
322% 201% 132% 65.9 70.5 6.3 199.7 833.3 -29.0%
522% 518% 454% 244.2 528.1 10.0 670.0 3,164.7 -1.0%
1,812% 758% 403% 2,322 9,382 10 3,341.0 111,413 -0.9%
130,060% 65,374% 1,698,514% 1,004,910% 170,181% 109,690% 102,418% 58 173 637 738 -49.1%
31,910% 43,707% 114,626% 128,612% 24,972% 36,989% 15,391% 24,759 49,756 108,744 120,827 -26.4%
4,831% 8,746% 73,007% 129,191% 5,581% 9,862% 5,653% 2,125,906 3,403,744 5,660,494 5,958,414 -43.7%
111.2% 100.7% 29.5% 20.1%
236.0% 159.6% 29.5% 21.1%
1,737% 1,119% 29.5% 20.8%
43,950% 63,257% 29.5% 23.3%
7,455% 4,913% 29.5% 26.1%
2,273% 3,185% 30.5% 27.4%
-13.2% -16.1 3.9 37.2 35.1 33.3 1.6 13.8 -12.2 -7.7 3.3 16.4 44.9
-3.4% -3.9 11.0 27.4 25.9 16.4 1.3 9.4 -8.2 -6.9 2.9 11.0 35.5
10.1% 8.7 22.0 34.0 31.5 12.0 1.0 7.3 -6.3 -7.6 -0.5 9.5 46.7
8.7% 6.3 18.8 33.7 29.8 14.9 0.8 7.3 -6.5 -8.0 -0.6 9.2 63.1
9.2% 6.9 11.0 18.3 15.4 7.3 0.4 3.6 -3.1 -5.6 -0.9 6.4 62.4
10.4% 9.1 10.3 21.0 18.6 10.8 0.5 4.3 -3.8 -5.6 -0.9 6.0 60.3
33.9% 35.6% 3.3% 1.7% 44.0% 29.8% -11.9% -14.1%
32.2% 39.5% 8.0% 7.3% 47.9% 24.1% -22.4% -23.7%
23.8% 27.4% 9.6% 3.6% 38.4% 11.5% -14.7% -26.8%
33.0% 26.9% -1.7% -6.1% 35.0% 25.2% -0.9% -9.9%
25.0% 16.9% -2.9% -8.1% 27.0% 15.2% -2.1% -11.9%
27.0% 24.9% 3.1% -2.1% 29.0% 23.2% 3.9% -5.9%
113.9% 98.6% 15.3% 45.0% 10.1% 34.9% 12.1 6.3 47.4%
132.4% 116.5% 15.9% 44.3% 3.6% 40.7% 8.6 6.9 54.0%
180.1% 159.4% 20.7% 54.1% 0.5% 53.7% 7.4 7.1 41.5%
215.0% 190.2% 24.8% 71.6% 2.3% 69.4% 7.3 5.8 38.0%
215.7% 191.6% 24.1% 78.6% 6.6% 72.0% 7.9 5.2 69.7%
187.5% 167.1% 20.4% 112.2% 47.8% 64.4% 7.3 5.0 69.7%
7.0% 8.0%
10.0% 3.3%
11.0% 0.6%
8.0% 6.1%
9.0% 6.9%
3.2% 14.4% 100,000 VEF
LATAM THIS WEEK
Monday, July 29, 2019
Table 13: Venezuela Quarterly Economic Time Series and forecasts, 2015-2020 2015 Real GDP growth (% yoy) Real GDP growth (% qoq, sa, annualized) CPI inflation (Torino Model Estimates, % yoy, eop) Imports of goods, growth (%, yoy) Transaction-weighted average exchange rate (vs USD, Current account balance (US$ bn) Nominal exchange rate 1 - DIPRO (vs USD, eop) Nominal exchange rate 2 - DICOM (vs USD, eop) Nominal exchange rate 3 - Parallel (vs USD, eop) 2016(E) Real GDP growth (% yoy) Real GDP growth (% qoq, sa, annualized) CPI inflation (% yoy, eop) Imports of goods, growth (%, yoy) Transaction-weighted average exchange rate (vs USD, Current account balance (US$ bn) Nominal exchange rate 1 - DIPRO (vs USD, eop) Nominal exchange rate 2 - DICOM (vs USD, eop) Nominal exchange rate 3 - Parallel (vs USD, eop) 2017(F) Real GDP growth (% yoy) Real GDP growth (% qoq, sa, annualized) CPI inflation (Torino Model Estimates, % yoy, eop) Imports of goods, growth (%, yoy) Transaction-weighted average exchange rate (vs USD, Current account balance (US$ bn) Nominal exchange rate 1 - DIPRO (vs USD, eop) Nominal exchange rate 2 - DICOM (vs USD, eop) Nominal exchange rate 3 - Parallel (vs USD, eop) 2018 (F) Real GDP growth (% yoy) Real GDP growth (% qoq, sa, annualized) CPI inflation (Torino Model Estimates, % yoy, eop) Imports of goods, growth (%, yoy) Transaction-weighted average exchange rate (vs USD, Current account balance (US$ bn) Nominal exchange rate 1 - Other (vs USD, eop) Nominal exchange rate 2 - DICOM (vs USD, eop) Nominal exchange rate 3 - Parallel (vs USD, eop) 2019 (F) Real GDP growth (% yoy) Real GDP growth (% qoq, sa, annualized) CPI inflation (Torino Model Estimates, % yoy, eop) Imports of goods, growth (%, yoy) Transaction-weighted average exchange rate (vs USD, Current account balance (US$ bn) Nominal exchange rate 1 - DICOM (vs USD, eop) Nominal exchange rate 2 - Other (vs USD, eop) Nominal exchange rate 3 - Parallel (vs USD, eop) 2020 (F) Real GDP growth (% yoy) Real GDP growth (% qoq, sa, annualized) CPI inflation (Torino Model Estimates, % yoy, eop) Imports of goods, growth (%, yoy) Transaction-weighted average exchange rate (vs USD, Current account balance (US$ bn) Nominal exchange rate 1 - DICOM (vs USD, eop) Nominal exchange rate 2 - Other (vs USD, eop) Nominal exchange rate 3 - Parallel (vs USD, eop)
eop)
eop)
eop)
eop)
eop)
eop)
1Q -1.4% -10.5% 82.4% -2.4% 40.3 -6.09 6.3 185.8 252.6 1Q -13.4% -23.1% 209.6% -54.7% 199.3 -1.40 10.0 229.7 1,172.6 1Q -12.2% -2.1% 317.0% -27.2% 408.9 1.72 10.0 709.0 3,790.8 1Q -18.1% -0.3% 2,127.9% 7.3% 34,842.7 1.80 0.0 49,416.0 235,998.2 1Q -33.5% -69.4% 329,567.6% -53.8% 165,112,998.0 3.03 520,289,000.0 350,136,000.0 1Q -12.0% 12.0% 15,192.9% 45.0% 28,271,503,721.3 3.96 47,016,067,457.8 49,490,597,324.0
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2Q -4.8% -5.9% 97.2% -24.9% 79.7 -1.90 6.3 198.4 484.4 2Q -17.6% -21.1% 296.4% -46.6% 204.6 -1.31 10.0 591.6 1,043.6 2Q -15.6% -31.2% 250.7% -23.6% 994.2 1.55 10.0 2,637.0 7,781.0 2Q -17.6% -28.6% 10,470.7% 42.8% 423,851.2 0.45 0.0 114,857.0 3,405,751.0 2Q -40.6% -53.7% 124,434.2% -50.0% 320,653,123.8 1.57 671,645,527.9 787,954,000.0 2Q 10.4% 14.6% 25,224.6% 45.0% 113,990,703,004.3 2.04 189,568,783,989.7 199,546,088,410.2
3Q -7.4% -9.2% 141.5% -34.7% 117.2 -5.05 6.3 199.3 823.1 3Q -19.0% -15.9% 263.2% -57.4% 213.8 -1.49 10.0 650.0 1,078.3 3Q -15.8% -16.2% 370.1% -15.0% 2,800.6 1.97 10.0 3,341.0 29,146.1 3Q -22.5% -33.7% 44,950.5% 2.0% 1,996,338.2 2.37 0.0 6,209,229.0 9,806,000.0 3Q -39.0% -21.7% 61,732.7% -50.0% 1,229,490,415.9 1.85 3,129,198,189.6 2,844,725,626.9 3Q 13.5% -12.4% 12,021.2% 45.0% 196,975,934,791.5 2.48 327,574,858,734.2 344,815,640,772.8
4Q -10.2% -15.4% 180.9% -47.6% 70.5 -5.23 6.3 199.7 833.3 4Q -17.9% -10.4% 274.4% -42.8% 528.1 -1.20 10.0 670.0 3,164.7 4Q -18.9% -22.8% 862.6% -39.1% 9,381.9 3.48 10.0 3,341.0 111,413.2 4Q -20.0% 26.0% 130,060.2% 45.3% 17,272,925.3 1.69 -0.9 63,738,227.0 73,829,000.0 4Q -36.4% 47.7% 31,909.9% -50.0% 4,975,641,596.2 0.43 10,874,398,826.1 12,082,665,362.3 4Q 8.7% 24.2% 4,831.4% 55.0% 340,374,415,319.6 0.67 566,049,355,892.6 595,841,427,255.4
LATAM THIS WEEK
Monday, July 29, 2019
Table 14: Ecuador Annual Economic Time Series and Forecasts, 2012-2020 Variable General indicators Nominal GDP (US$ bn) GDP per capita (US$) Unemployment rate (%) Population (millions) Output and aggregate demand components Real GDP growth (% yoy) Domestic demand growth (% yoy) Real investment growth (% yoy) Real consumption growth (% yoy) Real private consumption growth (% yoy) Real government consumption growth (% yoy) Real export growth (% yoy) Real import growth (% yoy) Prices, wages and exchange rates CPI inflation (% yoy, eop) CPI inflation (% yoy, avg) Minimum wages (% yoy) Monetary and credit indicators Monetary base growth (% yoy) Broad money growth (% yoy) External accounts Current account balance (% of GDP) Current account balance (US$ bn) Trade balance (US$ bn) Exports, f.o.b. (US$ bn) Main export - Oil Imports, f.o.b. (US$ bn) Service balance (US$ bn) Income balance (US$ bn) International reserves (US$ bn, avg.) Price of main export commodity - oil (US$ per barrel) Fiscal accounts General gov. expenditures (% of GDP) General gov. revenues (% of GDP) General gov. primary budget balance (% of GDP) General gov. budget balance (% of GDP) Restricted public sector expenditures (% of GDP) Restricted public sector revenues (% of GDP) Restricted public sector primary budget balance (% of GDP) Restricted public sector budget balance (% of GDP) Debt Indicators Gross external debt (% of GDP) Public (% of GDP) Private (% of GDP) Gross government debt (% of GDP) Domestic (% of GDP) External (% of GDP) External debt amortizations (US$ bn)
2012
2013
2014
2015
2016
2017
2018 (E)
2019 (F)
2020 (F)
87.9 5664.9 5.2 15.5
95.1 6030.4 4.8 15.8
101.7 6347.2 4.5 16.0
99.3 6099.3 5.4 16.3
99.9 6046.2 6.8 16.5
104.3 6216.6 5.7 16.8
108.4 6367.7 5.4 17.0
109.1 6316.6 5.3 17.3
109.9 6274.1 5.2 17.5
5.6% 4.2% 10.6% 4.2% 2.9% 11.1% 5.5% 0.8%
4.9% 6.2% 10.4% 5.0% 3.9% 10.3% 2.6% 7.0%
3.8% 3.4% 2.3% 3.5% 2.7% 6.7% 6.2% 4.8%
0.1% -2.2% -6.2% 0.3% -0.1% 2.1% -0.6% -8.2%
-1.2% -4.3% -8.9% -2.0% -2.4% -0.2% 1.4% -9.6%
2.4% 5.5% 5.3% 3.6% 3.7% 3.2% 0.7% 12.2%
1.4% 2.5% 2.7% 3.5% 3.6% 2.9% 2.7% 6.5%
0.3% 0.5% 1.6% 2.7% 2.7% 2.7% 1.4% 1.8%
0.7% 0.7% 2.1% 1.3% 1.5% 0.7% 2.0% 1.8%
4.2% 5.1% 6.2%
2.7% 2.7% 6.1%
3.7% 3.6% 3.1%
3.4% 4.0% 0.7%
1.1% 1.7% 2.2%
-0.2% 0.4% 2.7%
0.3% -0.2% 2.7%
-0.2% 0.2% 2.1%
-0.2% 0.0% 0.2%
19.2% 16.4%
27.3% 13.4%
15.6% 14.4%
12.8% -1.1%
28.1% 16.5%
4.6% 10.0%
2.8% 6.8%
8.2% 2.8%
5.8% 3.3%
-0.2% -0.1 0.0 24.6 13.8 24.5 -1.4 -1.3 3.7 98.1
-1.0% -0.9 -0.5 25.6 14.1 26.1 -1.4 -1.4 4.1 95.6
-0.7% -0.7 -0.1 26.6 13.3 26.7 -1.2 -1.5 5.0 85.0
-2.2% -2.2 -1.6 19.0 6.7 20.7 -0.8 -1.7 3.8 42.0
1.3% 1.3 1.6 17.4 5.5 15.9 -1.1 -1.8 3.5 34.8
-0.5% -0.5 0.3 19.6 6.9 19.3 -1.1 -2.4 3.8 45.8
-1.4% -1.5 -0.3 22.1 8.8 22.4 -0.7 -2.9 3.7 60.8
-1.8% -2.0 -1.4 22.5 8.8 23.9 -0.7 -2.5 4.4 58.0
-1.5% -1.7 -0.5 23.5 9.0 24.0 -0.7 -3.0 4.4 56.8
28.2% 27.8% 0.7% -0.4% 40.3% 39.3% -0.2% -0.9%
31.5% 27.3% -2.9% -4.1% 43.7% 39.2% -3.5% -4.6%
31.3% 25.9% -4.1% -5.4% 43.6% 38.4% -4.2% -5.2%
29.9% 26.2% -1.9% -3.7% 39.5% 33.6% -4.6% -6.0%
26.7% 20.7% -4.1% -6.0% 37.7% 30.3% -5.8% -7.3%
26.2% 20.3% -3.5% -5.9% 36.5% 32.0% -2.3% -4.5%
25.9% 23.2% 0.1% 2.7% 36.7% 35.4% 1.3% -1.3%
25.4% 24.4% 2.1% -1.0% 34.4% 33.1% 1.5% -1.3%
24.7% 24.8% 3.0% 0.1% 34.2% 34.2% 2.7% 0.0%
18.1% 12.2% 5.9% 21.2% 8.8% 12.4% 1.2
19.6% 13.5% 6.2% 24.0% 10.4% 13.6% 1.2
23.6% 17.2% 6.4% 29.6% 12.3% 17.3% 1.7
27.6% 20.2% 7.4% 33.0% 12.6% 20.4% 2.1
34.3% 25.5% 8.8% 38.2% 12.5% 25.7% 1.8
38.2% 30.3% 7.9% 44.6% 14.2% 30.4% 8.0
40.1% 32.7% 7.5% 45.5% 12.6% 32.9% 5.8
41.6% 34.1% 7.5% 46.9% 12.6% 34.3% 5.2
42.0% 34.1% 7.9% 46.9% 12.6% 34.3% 5.4
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LATAM THIS WEEK
Monday, July 29, 2019
Table 15: Ecuador Quarterly Economic Time Series and forecasts, 2015-2020 2015 Real GDP growth (% yoy) Real GDP growth (% qoq, sa) CPI inflation (% yoy, eop) Imports of goods, (US$ bn) Current account balance (% of GDP) 2016 Real GDP growth (% yoy) Real GDP growth (% qoq, sa) CPI inflation (% yoy, eop) Imports of goods, growth (US$ bn) Current account balance (% of GDP) 2017 Real GDP growth (% yoy) Real GDP growth (% qoq, sa) CPI inflation (% yoy, eop) Imports of goods, (US$ bn) Current account balance (% of GDP) 2018(E) Real GDP growth (% yoy) Real GDP growth (% qoq, sa) CPI inflation (% yoy, eop) Imports of goods, (US$ bn) Current account balance (% of GDP) 2019(F) Real GDP growth (% yoy) Real GDP growth (% qoq, sa) CPI inflation (% yoy, eop) Imports of goods, (US$ bn) Current account balance (% of GDP) 2020(F) Real GDP growth (% yoy) Real GDP growth (% qoq, sa) CPI inflation (% yoy, eop) Imports of goods, (US$ bn) Current account balance (% of GDP)
1Q 4.2% 0.2% 3.8% 5.84 -3.7% 1Q -3.4% -0.7% 2.3% 3.77 -0.4% 1Q 1.7% 0.2% 1.0% 4.32 1.1% 1Q 1.8% -0.8% -0.2% 5.08 -0.3% 1Q 0.6% -1.0% -0.1% 5.37 -1.0% 1Q 0.6% -0.9% 0.3% 6.06 -0.8%
25
2Q 0.2% -1.6% 4.9% 5.31 -1.1% 2Q -1.2% 0.7% 1.6% 3.61 3.8% 2Q 2.1% 1.1% 0.2% 4.63 0.1% 2Q 1.4% 0.7% -0.7% 5.57 -1.0% 2Q 0.1% 0.2% 0.6% 6.06 -1.3% 2Q 0.7% 0.3% 0.1% 6.31 -1.1%
3Q -1.4% -0.3% 3.8% 4.98 -2.1% 3Q -1.0% -0.1% 1.3% 4.03 1.0% 3Q 2.9% 0.8% 0.0% 5.05 -1.8% 3Q 1.5% 0.8% 0.2% 5.82 -0.9% 3Q 0.1% 0.8% -0.1% 6.24 -1.3% 3Q 1.0% 1.1% -0.1% 6.30 -1.0%
4Q -2.5% -0.9% 3.4% 4.57 -2.0% 4Q 0.8% 0.9% 1.1% 4.45 0.9% 4Q 2.8% 0.7% -0.2% 5.31 -1.2% 4Q 0.8% 0.1% 0.3% 5.91 -3.2% 4Q 0.5% 0.4% -0.2% 6.24 -4.3% 4Q 0.6% 0.0% -0.2% 0.00 -3.5%
LATAM THIS WEEK
Monday, July 29, 2019
Table 16: Venezuela and PDVSA bond payment status as of July 29, 2019
Venz Venz 13.625 2018 Venz 7 2018N Venz 7.75 2019 Venz 6 2020 Venz 12.75 2022 Venz 9 2023 Venz 8.25 2024 Venz 7.65 2025 Venz 11.75 2026 Venz 9.25 2027 Venz 9.25 2028 Venz 11.95 2031 Venz 9.375 2034 Venz 6.5 2036 Venz 7 2038 PDVSA PDVSA 8.5 2020 PDVSA 9 2021 PDVSA 12.75 2022 PDVSA 6 2022N PDVSA 6 2024 PDVSA 6 2026 PDVSA 5.375 2027 PDVSA 9.75 2035 PDVSA 5.5 2037 Other ELECAR 8.5 2018 TOTAL
Coupon (%) 13.625 7 7.75 6 12.75 9 8.25 7.65 11.75 9.25 9.25 11.95 9.375 6.5 7 8.5 9 12.75 6 6 6 5.375 9.75 5.5 8.5
Past Due PDI + Accrued Interest (PDI) Accrued 6,798 948 5,851 144 144 105 105 387 56 443 180 12 192 573 163 736 360 42 402 412 60 472 245 33 278 705 96 801 555 140 695 370 43 413 753 243 996 280 5 285 650 25 675 132 29 161 3,365 564 3,928 54 54 431 44 475 573 170 743 270 46 316 600 62 662 540 56 596 242 48 290 585 59 644 124 25 149 28 28 28 28 9,243 1,511 10,754
Past Due PDI + Accrued Number of Last due Days since last due date Principal + Principal Missed Coupons date 2,053 8,851 53 05/07/19 14 1,053 1,197 2 08/15/18 348 1,000 1,105 3 12/03/18 238 443 4 04/15/19 105 192 4 06/10/19 49 736 3 02/25/19 154 402 4 05/07/19 83 472 4 04/15/19 105 278 4 04/22/19 98 801 4 04/22/19 98 695 3 03/15/19 136 413 4 05/07/19 83 996 3 02/05/19 174 285 4 07/15/19 14 675 4 07/01/19 28 161 3 04/01/19 119 3,928 28 05/17/19 73 54 04/29/19 91 475 4 05/17/19 73 743 3 02/19/19 160 316 3 04/29/19 91 662 4 05/16/19 74 596 4 05/15/19 75 290 3 04/12/19 108 644 4 05/17/19 73 149 3 04/12/19 108 650 678 1 04/10/18 475 650 678 1 04/10/18 475 2,703 13,457 82
Disclosure: Securities offered through Torino Capital LLC, member FINRA/SIPC. Although the statements of fact and data in this presentation have been obtained from, and are based upon, sources that Torino Economics LLC believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. Any views expressed in this report are those of the author(s) and not of the entity. All opinions included in this material are subject to change without notice. This material is provided for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. This is a product of the sales and trading desk and should not be considered research. It is intended for institutional, professional and accredited investors only. Any comments in this note are not meant to provide legal, accounting or tax advice. Readers should consult with their own independent advisors on these matters.
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