BCV’s Latest Stealth Report

While you weren't paying attention, BCV put out its QIV 2015 report. It's...everything you'd expect it to be.


While you were pouring milk on your cereal this morning thinking about the implications of Maduro’s speech yesterday, the Central Bank (BCV) published an economic data report “under the radar” with the remaining macro figures of 2015. This is a chavista classic: to publish sensitive data when the country is still digesting and discussing what just happened the day before – in this case, the “Paquetazo rojo”.

The Headline: inflation in the last quarter was 34.6%, and a total, historic, never-seen, record-high, yet “maquillada” 180.9% of inflation last year. We all know that real inflation levels are actually higher than that.

Nonetheless, this official inflation is highest in the world (for the third year in a row we’re  world champions in that division), and the highest in Venezuela’s entire history. Yet, the BCV still has the nerve to say that 4Q2015’s inflation is lower than 3Q2015’s (34.6% vs 38.9%) and that 10 out of 13 activities had a lower-than-average inflation – as if it was some sort of accomplishment.

As per GDP performance, the BCV reported a -5.7% contraction. Again, we all know better than to take that number at face value, but it’s what they said. Even this figure reflects the worsening of a deep, structural and worrying recession that started at in early 2014 – with oil prices above the USD 80 per barrel – and aggravated by low oil prices in 2015. Even the official BCV data screams that the real problem is el modelo.

But wait, there’s more! The private sector registered a -8.4% contraction, while the public sector grew +1.1%…this is the real “Guerra Económica” folks. Unless it makes sense to you that the private sector is “sepukkuing” itself just to destabilize Maduro.

The combined effect of 2014 and 2015 recession (-3.9% and -5.7% respectively) is much worse than what was registered in 2009 and 2010, after the global economic crisis (-3.2% and -1.5% respectively).

On Trade Balance matters the BCV reported a -18.7% decrease in total imports. This, and not any of the paja Maduro talked about yesterday, is where the government’s real adjustment strategy shows up.

Without the dollars to maintain their populist agenda while servicing debt payments, they prioritized debt payments in 2015, to the tune of USD 10.886 million, over food and medicines imports. The Results: crippling shortages of any basic product you can imagine.

In general Balance of Payments grounds, the current account showed a staggering deficit around USD 18.150 million due to the free fall in the oil market.

All-in, I think we can say that 2015 was the worst year in economic terms of Venezuela’s modern history. Bueno, not counting 2016.

El Legado de Chávez.


  1. Ok, I have to take issue with your claim that inflation and GDP figures are doctored. What is the basis for that? As far as we know, the IMF validates the BCV’s methodology. Is this just you #Cafetaling?

    • Regarding inflation, they have been underreporting it since the late commander took power. They do it by picking an arbitrary set of goods (they have discretion to do this) and, of course, as you can imagine, they overweight goods with fixed prices. Regarding GDP is trickier, but there is plenty of evidence that there are major discrepancies between household surveys and what ends up going to consumption in the National accounts (Angus Deaton has done a lot of research on this area). This is a major problem in developing economies. I guess IMF validates these figures because they implicitly trust that the numbers provided are true. It would be interesting to get a hold of the consumer household surveys to see what’s really going on.

    • I dont like #Cafetaling just because. You made a valid point, but this case comes from August 2014’s methodolohy changes, by which the official inflation resulted – at the conditions of that time- to be underestimated in comparison to the previous methodology. Of course, those conditions are worse nowadays, with the same trend, reason why it’s very likely that current official inflation levels are also underestimated.

      The IMF has been validating shady methodologies in the past. Greece was one of them back in the 2000’s. Argentina is the only country that got a sanction from the IMF, but many more deserved it as well, but did not get it. Especially those without Article IV revisions – the last Article IV revision in Venezuela was in 2004.

      • BCV is estimating prices accordingly the Just Prices Law, it means that the BCV’s inflation rate just uses regulated goods. And that it is very easy to proof, son BCV is adjusting its monthly surveys -household surveys- to eliminate, “bachaqueros basket” and “parallel market prices basket”. I my estimation I include all of that, since I am looking ng for hyperinflation since I do model nominal money demand (BCV credit to government, PDVSA and public companies) or money base which fiscal deficits, the inflation which I get it is not inflation anymore, but hyperinflation, or “inflation out of control”. I include PDVSA in that calculations since BCV is bypassing Treasure giving the printed money to PDVSA directly, but it does to Treasure sometimes, I think this is a pattern, it is not random. Moody’s solved that conundrum last August when declared Venezuelan inflation as “hyperinflation”. What I do it something simple, I proxy ppp (power purchasing parity) and compare with parallel dollar prices, got 570% yoy 2105, at the end I jus look not for a correlation since they dot no mean causality as given, but interesting they are instantaneous correlating. S. Hanke is using the similar methodology, however, he uses dynamic ppp. which I believe it is correct, I do not, it since I am using my methodology for already four years, since BCV is cheating us from then. Finally, if you read at latest minimum salary adjustment, this week, it is interesting that minimum salary, indexation is already in, no doubt, we are living with a type of hyperinflation, where no full indexation has not been yet embedded in the price mechanism, buy after Maduro speech this week we go for it, when its “exchange rate bands” started playing. I believe we are to SIMADI remake.

  2. Nonetheless, this official inflation is highest in the world (for the third year in a row we’re world champions in that division)

    Which reminds me of a long-ago line in the Argentinian comic strip Clemente Y Bartolo, circa 1980. They were lamenting that Borges hadn’t won the Nobel Prize for Literature that year. For consolation, Clemente remarked that “We recently won the Nobel Prize for Soccer/Futbol, and for years we have won the Nobel Prize for Inflation.” True, that.

    Some repressive regimes create high inflation- Venezuela and Zimbabwe. Some repressive regimes continue the high inflation they inherited, such as Videla’s Argentina. Some repressive regimes “repress” the inflation they inherited, such as Pinochet’s Chile.


    • Boludo, you need some updating. Even Zimbabwe figure out the issue of inflation many years ago. They have had 5 years in a row with low inflation in the single digits.
      Currently is 0.1%
      They can’t print money after adapting the US$ as official currency.
      That was all it took.
      No inflation issues neither for Ecuador, Panama, El Salvador 15 years now !

      • Argentina’s Macri decided for free floating Currency and sure enough they are having inflation issues already with the hopes to stabilize in 3 freaking Years. Also they will have a hard time attracting foreign investment because nobody trust their currency. That would take a while…..

  3. Slightly off topic, pero pana…. Capriles needs to learn some math. He says we have 2% inflation A DAY. He gets that by dividing the IMF’s 2016 projection of 720%, dividing by 365, and rounding up. If we actually had 2% inflation a day, that would be 137,641% a year (1.02^365-1 converted to %). Someone needs to tell him about compound interest… In his position, making such claims is just irresponsible. (source: http://runrun.es/nacional/venezuela-2/248903/12-frases-de-henrique-capriles-para-activar-el-revocatorio.html)

  4. Conventional inflation calculating methodologies are flawed in that they dont take into account the cost and effort spent by a regular person in finding the goods it purchases ,e.g. if to buy X good at 1000 Bs I have to spend 48 hours to purchase it , the price of that good is different than if to find it I have to spend 50 manhours or more going from store to store during a 2 month period before purchasing it, even if the counter price is the same !! If you factor in the time and effort spent buying a good its worth lots more than the normal purchase price , more so if in the end there is a high chance that the good in question is never found . !! Economists sometimes play nice neat games but the result is one that does not reflect reality!!

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