Boston, MA -- (SBWIRE) -- 04/25/2014 -- BMI believes that, given the substantial headwinds facing the Venezuelan economy, the country's real GDP will expand slowly over the coming years, at 2.0% in 2013 and 1.5% in 2014. Despite enormous natural resource wealth, the economy's outlook will be dimmed by poor macroeconomic governance, high inflation and significant political uncertainty. Furthermore, we expect household consumption to continue to be constrained by high inflation, which has substantially eroded purchasing power.
Headline Industry Data (US$)
- Per capita food consumption forecast 2014 to 2018 = +74.9%.
- Alcoholic drink sales forecast 2014 to 2018 = +73.6%.
- Soft drink sales forecast 2014 to 2018 = +72.1%.
- Mass grocery retail sales forecast 2014 to 2018 = +78.9%.
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Key Industry Trends And Developments
Increased Agricultural Production Has Little Impact On Food Shortages: Venezuela's Ministry of Agriculture and Lands has announced that domestic agricultural production grew by 10.6% year-on-year in 2013, with increased production of maize, sugarcane, potatoes and vegetables spearheading this growth. Despite this, food shortages continue to plague the country as supply of raw material for the domestic food industry fell some way short of demand.
Price Controls Likely To Include All Consumer Goods: In November 2013, the Venezuelan National Assembly granted President Nicolas Maduro the power to rule by decree, bypassing the need for congressional approval for enacting new laws for a period of 12 months, in a move which is sure to rattle the private sector further and add to the growing apprehension about the country's direction under the new president. In a speech outlining his intentions as to how he will use the expanded powers, Maduro said he would 'launch a war' against corruption and unscrupulous business owners, whom he blamed for the country's soaring inflation. In early 2014, the president's intentions became clearer with the introduction of a cap in company profits at 30%. The regulations apply across the economy, although the intention is to introduce specific profit limits in different sectors as the government agency in charge of enforcing the law believes that not all sectors require a 30% profit margin.
Retail Prices Under Scrutiny: The most high-profile and perhaps most significant recent development to occur from a business environment perspective was President Maduro's announcement in November 2013 that an appliance distributor, Daka, had been overcharging consumers and would be forced to sell all of its merchandise at 'just prices'. It was not immediately clear why the government singled out Daka for such treatment, but the announcement was almost certainly meant as a warning to other retailers.
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