Just a simple picture of the one things that counts in this country.
2013
As we know, 2013 was the year that Chavez died.
The seeds of his demise were already planted and blooming by
January 2013, when he failed to make his expected speech. The situation did not
improve in February and in early March he died, leaving his deputy in charge.
April saw elections and although Maduro won it was by a
small margin and contested by the opposition. As a result there were outbreaks
of violence.
In May the violence was actually in parliament as a fist
fight broke out
Economically things were also deteriorating with inflation
hitting 10%
An S+P downgrade added to the mood in June. And by July
inflation was 30% and rising and shortages of basics, which had been common in
the country for some time were getting worse.
By September shortages of power had joined imported items as
a problem and the leadership was facing increased challenges.
By November inflation for 10 months was 54% in
hyperinflation territory and 100 businessmen were jailed for alleged
uncompetitive pricing etc
In December another downgrade capped off a rather disastrous
year for the country.
2013 Bolivar
The Bolivar has been a troubled currency for some time, with
unofficial ( but illegal) rates accounting for much of the day to day
transactions.
The problem was once again acknowledged through a 32%
devaluation in February 2013
In March, following Chavez’s death the country tried to
implement a new foreign exchange market, SICAD, but this didn’t really take off
at this time.
May inflation figures were worrying, showing 10% - perhaps
due to the devaluation but perhaps just due to the economic conditions that
caused it.
So by June, inflation was becoming a serious concern, and
the debt downgrade did nothing to reassure.
Further attempts to revive the new foreign exchange market
were attempted. But the situation was escalating and in July inflation had
reached 30%.
The global emerging market currency situation in July and
August did absolutely nothing to improve the situation.
So by the end of October inflation for just the 10 months of
2013 was reported at 54%- in the land of hyperinflation. The unofficial rate in
November was more than 9 TIMES the official rate of around 6 bolivars to the
dollar compared to 4 times in late 2012 ( which was pre – devaluation)!
The year ended with the Venezuela stock exchange showing a
295% increase – the best globally but with the currency in a mess
2014
While there is no miraculous cure in sight for the country’s
ills, we must always bear in mind that as a major oil producer its position remains
only challenging and not disastrous. The period January to April 2014 thus
looks moderately ok. There is a need for the new leadership to transform and
many basic economic problems remain but these restrictions can be managed.
May, brings
surprises, possibly from elsewhere in the world and actually these look
to be in the country’s favour. Certainly
things are easier for the leader than before.
June and July see the
focus very much on the country’s leadership. Again there is a need to focus on
making the right adjustments, but there is sufficient support to allow this.
In June the people might get carried away in their
excitement – the feeling is almost religious. By July however the focus is on
financial structures. Together these two suggest possible hyperinflationary
tendencies and the need to restructure finances to overcome them.
There is a return to the focus on external events and
relations in August and September. Economic matters are still a little tricky but there mood of the people is
good in August.
By September they are feeling restricted though, despite
some very good opportunities for the country.
In October restraint is the name of the game.
And in the last two months things seem to be coming to a
head. There is once again a focus on the government’s need to radically
transform, and there may be pressure put on them by the people who are once
again in an agitated state ( again perhaps monetary issues are the cause).
However there is sufficient financial and political might to calm them down and
by the end of December the mood of the
people is much more upbeat.
2014 Bolivar
The situation shows no let up in the first months of 2014.
Indeed the risk of serious instability looks to be increasing. The currency is
no longer sustainable in its current form. There is a risk of another
devaluation.
March and April are marginally better months, but there is
still huge impetus for a radical revamp.
May through to August sees increasing pressure on the currency
With the risk of further hyperinflation and another
devaluation by the end of the period.
A devaluation certainly seems to be on the cards then as
September and October show signs of adjusting to new conditions.
However, the situation hasn’t really improved for the people
in the last months, with hyperinflation looking likely and so much pressure on
the old currency that a decision on its future needs to be taken.
2015
In 2015 matters move into a different mode.
Despite the attempts by the government to keep things on an
even keel, by January this proves difficult. There are huge undermining forces
which might seek to destabilise things. However
it seems these are only in their infancy at this stage as for the first
couple of months the country looks to be doing well and the people are again
feeling positive.
March and April see eyes once again turned to the outside
world and it may be that now the government is not viewed as taking the right
steps. There is opportunity still but now the path is less direct, it will be
necessary to negotiate the position step by step and there is a danger that the
leadership will rush in without such caution.
The picture is better in May and June. Although there are
still some tricky matters to be watched, there is once again a very upbeat
mood.
But nothing is stable and July and August see a swing back
to problems.
Once again there are attempts to undermine the foundations
of the country and some difficulties and hardships for the people as a whole.
There is that sense of agitation again and a difficulty in getting people to
make any constructive progress.
The situation continues into the next few months as the
focus turns once again to external relationships. There is a tendency for
officials to put their foot in their month and upset others. And by late
October/November there seems to be a sudden change in policy by th leadership –
it could even mean a resignation and replacement.
December thus sees a somewhat rosier picture – although this
might only be while everyone waits to see how the new land will lie.
Nevertheless, it appears that this time will see a great
deal of action and perhaps trade.
2015 Bolivar
There is no let up in January and February 2015 either,
although the long term undermining seems to have dissipated there is still a
serious inflation situation.
There may severe be restrictions on trading the currency by
this stage.
It comes to a head in March and April with possible complete
loss of control.
So that in May the restrictions become even more severe.
There may be talk of creating a new
currency based on something else.
No real improvement us likely in July and August with
further sudden shocks likely.
The end of the period sees much trade as restrictions seem
to be briefly relaxed.
September sees a return to the long term undermining
problems, maybe another devaluation and increasing likelihood of creating a new
currency form.
October to December see more restrictions.
2016
January and February 2016 are, mixed months. There is
evidence of progress being made in terms
of changes but there is also resistance to that change from some quarters and
misinformation. There is thus a risk of it looking as if the country is rushing
headlong in the wrong direction
March through to May sees the beginning of a new phase.
But there are still many old challenges to be addressed and
some possible protesting.
The leadership walks a tightrope where is must balance
optimism and progress against traditionalism and opposition.
The focus remains on the government’s ability to do this
throughout June and July.
August sees little actual progress as there is too much
adjusting to various influences but there is a sense of power and belief in
what can be accomplished.
September sees problems, perhaps with water or just a lack
of conviction from the people.
There can be big announcements and yet more of a tug of war
between old and new under this configuration.
2016 ends with the same two steps forward and one step back
and polarisation of old and new that has characterised the whole year, but with
the promise ( real or illusionary) of 2017 improvements.
2016 Bolivar
January 2016 has yet another inflationary feel.
February to June continues the on-going trend.
July sees a new currency taking shape but possibly not being
widely available. There is a generally positive investor response.
Work on finalising this new currency takes place from
September to November and creates a high level of speculative trade.
December sees the likely new currency in place and possibly
a little more stability all be it fragile.
Comments