We all have low expectations for 2017. 2016 was the worst performing year for Venezuelans with a deadly combination of highest inflation ever recorded and with the largest GDP contraction we have ever seen. This, combined with an institutional crisis, has led the nation towards authoritarianism.

Like everyone else, companies expect even higher inflation, greater economic contraction and even more uncertainty about currency exchange.

PGA’s 2017 general report tells a story that is both terrifying and encouraging. For companies, the reality isn’t that different: an impossible economic situation mixed with a totally hostile environment means that doing business in Venezuela will be about the long game.

2017 is a year where the goal is survival.

Perspectivas 2017 Informe General by Caracas Chronicles on Scribd

122 companies from all industries and all sizes shared some of their expectations and strategies to survive 2017. Like everyone else, they expect 2017 to be even worse and to be a year with even higher inflation, greater economic contraction and even more uncertainty about currency exchange. This last point is crucial of course, half the companies in the study use DICOM’s rate as a reference. Only a meager 8% use DIPRO.

One of the biggest challenges facing companies in Venezuela is to retain talent and human resources. When high-skilled workers are offered decent salaries elsewhere, in nations with much better prospects, or when low-skilled workers can earn a day’s living by reselling goods, companies have to be really creative in order to be able to retain and afford employees. Among the strategies are the things you would expect, like wage increases, but with rampant inflation, companies can’t keep up. More and more companies are working towards providing their employees the flexibility they need to face the crisis. Whether it’s giving employees more time to stand in line to buy basic staples, or even dealing directly with certain distributors to buy products in bulk for staff.

Companies are working towards providing their employees the flexibility they need to face the crisis, like giving employees more time to stand in line to buy food.

Emigration is a way tougher problem to crack. Half the companies are implementing strategies to mitigate the impact of emigration. About 10% of them have started to offer compensation packages with some percentage in dollars, both for executives and key talent, and as many as 65% are considering it.

At the end companies are between a rock and a hard place. Desperate to preserve the human resources they need to keep operations going, but without the resources to do so. This leads to a serious dose of reality and an expectation for 2017 of shrinking workforce and many layoffs.

Que el 2017 nos agarre confesados.

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    • It is more complicated than that. You would be correct if you start with the assumption that all is lost forever. However, if you start with the assumption that, at some time in the future, there will be a change for the better (choose your own scenario), then it is highly advantageous for the businesses who are already in country to take advantage of the improved business climate. Businesses often do take the long view.

      So, yes, many businesses are developing strategies designed simply to weather the storm and survive as intact as possible, without any consideration of generating profits in the short-term.

    • Additionally, believe it or not, many business owners genuinely care about the legacy of their businesses, their employee’s livelihoods, their contribution to their communities, and other highly intangible values.

  1. An excellent article. The Chavista economic policy has been very easy to understand, if you don’t like what we’re doing, …leave. Good-bye. We don’t care. It’s Orwellian insanity. If you try and fight us, we will kill you or put you in jail. It’s that simple. People are now fleeing by the hundreds of thousands, corporations as well.

    Finally can someone please, please, provide an update on the health of Moctavio? We all miss him and his struggle is in our thoughts and prayers.

  2. Here is a triple win idea.
    1. Raúl sells Cuban citizenships. He gets money.
    2. Venezuelans who are now Cuban emigrate to the USA for a better life.
    3. USA benefits from all the new talent and drive injected into its economy.

    • Miami and South Florida is already floating in a sea of highly competent ex countrymen of yours.

      I see plenty of people who should be upper level executive in Fortune 500 types firms running Janitorial firms, buying coffee shops etc. The other day my father took an uber, his driver was a lawyer in VZ, now he lives in his Miami Condo (bought during better times) and covers his costs driving Uber and pitching everyone who gets in his cab to make him their RE agent.

      The US benefits from the mis government across much of Central and South America. In my 25 years in South Florida I have meet people from every part of this Hemisphere. The only group I don’t see except on vacation are Uruguayans, is it that the country is so small? Or because it is run well and it citizens don’t flee to So Florida, except maybe to shop at the malls.

  3. Any business that has already survived the shitstorm to date, and can keep going through 2017, will be well poised to take advantage when the economy does eventually recover. All rececessions end, sometime.

    • Tell that to the Cubans. Sometimes political recessions last decades.

      The facts are, Chavismo is deeply politically entrenched, has destroyed the counties judicial systems, basic infrastructures, and even civil society. Estimates indicate that 10% to 20% of the population have emigrated, most never to return.

      It would take a long series of perfectly timed miracles to change the course of Venezuela to a path of recovery. Unfortunately, I don’t see this happening anytime soon..


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