BMI's outlook for Venezuela's ports continues to be extremely bearish. The chronic mismanagement of the facilities since they were nationalised in 2009 has damaged their international reputation and their profit-making abilities. We do not expect any significant recouping of lost throughput levels over the mid term. Over a longer period, investments from China could see the facilities begin to regain some of their former glory. On the downside, however, a possible economic slowdown in China, a close trading partner of Venezuela, could negatively affect the country's ports.
On a macroeconomic basis, we expect Venezuela's current account to remain in surplus in 2012. However, we believe the country's constant financial account deficits, stemming from significant capital flight due to the negative operating environment, means that ultimately the country's balance of payments situation is unsustainable. As a result, although we believe the government will want to avoid a devaluation leading up to the presidential elections in October 2012 (thus preventing inflation heading significantly higher), we expect that the authorities will have to devalue the fixed exchange rate in an effort to avoid a balance of payments crisis. In light of this, our forecast for growth in trade is a sedate 2.6% in 2012, averaging 2.6% over the mid term.
Headline Industry Data
- 2012 Puerto Cabello tonnage throughput growth forecast at 0.5%. Slow growth expected to continue over the mid term, averaging 0.8% to 2016.
- 2012 Puerto Cabello container throughput to grow by 0.8%, and forecast to average 0.9% over our forecast period.
- Venezuelan trade value to increase 2.62% in real terms in 2012, with exports up by 4% and imports growing 3%.
Key Industry Trends
Venezuela To Ship More Fuel To Syria
In March Venezuela was readying a third shipment of diesel to the government of Syria, as President Bashar al-Assad intensified a crackdown against protesters. In February, Venezuela's government confirmed it had sent at least two shipments of fuel to Syria, despite Western sanctions on the increasingly isolated Assad regime.
MSC To Increase Operating Charges For Venezuela
Switzerland-based Mediterranean Shipping Company (MSC) has revealed plans to increase its operating charges for shipments moving between the Far East and parts of Central America, the Caribbean, and the north coast of South America, including Venezuela. The new rates, effective from March 15 2012, are US$560 per twenty-foot equivalent unit (TEU) and US$800 per forty-foot equivalent unit (FEU) or forty-foot high-cube container.
Key Risks To Outlook
The one major risk to our bleak financial account outlook is that we could yet see significant investment from more politically-allied economies, such as China and Russia. Although we believe the country's business environment remains precarious for private sector investors, Venezuela has already been able to create a US$32bn joint fund with China for development projects. Chinese investment in Venezuelan ports in particular provides upside risk to our shipping forecasts.
The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
Click for Report details:Venezuela Shipping Report Q3 2012
