Venezuela: don’t bank on a shift to more orthodox economic policies

Matthew Turner
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Investor confidence will depend on the outcome of the next presidential election while oil prices pose most immediate risk to economy.

An imminent shift to more prudent macroeconomic policies to address Venezuela’s chronic imbalances and reduce oil dependency risk is unlikely, say ECR’s expert contributors, following Chavez’s death on Tuesday.

Low and declining levels of FDI in the country and rising domestic tensions heap on near-term risks, according to Pascaline della Faille, analyst at ONDD. In general, market analysts expected the announcement of president Hugo Chávez’s death sooner rather than later – as such, the recent events in the country were priced in by market analysts. This is reflected by a tightening of Venezuela’s yields in the last month and a bottoming out of the country’s ECR...