Vale Q2 iron ore output up 2.4% from a year earlier
The company reported output of 80.6 million metric tons for the steel-making ingredient in the three-month period ended in June.
“A large economic crisis is looming in Venezuela as all major economic decisions, including a much needed currency devaluation, are likely to be postponed until a new government is in place,” according to a report released by global risk consultants Exclusive Analysis, recently acquired by IHS (NYSE:IHS).
“As long as the transition is delayed and economic policy paralysis continues, we expect currency and non-payment risks to increase substantially.
Foreign firms are likely to struggle to obtain foreign currency under the exchange controls” said Carlos Cardenas, Deputy Head of Latin America Forecasting.
“Venezuela’s currency is currently trading against the dollar at a rate 296% higher than the official rate. On 7 January it emerged that the fiscal deficit had reached between 15-17% of GDP in 2012, compared to the 11.6% of GDP registered in 2011.
Likewise, as of 27 December 2012, Venezuela had international reserves of $26.16 billion, but only $3 billion of this was in liquid assets.
The lack of available cash has translated into less allocation of dollars from the Foreign Exchange Administrator CADIVI and the Central Bank SITME system,” said Cardenas.
“To reassert his authority, Vice President Maduro is expected to adopt an aggressive stance against the opposition and economic groups perceived as ‘enemies of the poor’.
The growing political instability, together with a marked worsening of the macroeconomic situation increases the risk that Maduro will depict the private sector as the main source of the country’s economic ills,” said Cardenas.
“This raises the risk of nationalisation for food companies and large retailers significantly,” he continued.
