Venezuela is currently in a self-declared state of economic emergency. Inflation is forecast to reach some 480% by the end of 2016, remaining high in the near to mid term. As a result, when Venezuela is viewed in our data as part of current terms (ie with inflation) regional or global forecasts, hyperinflation and the resulting US dollar exchange rate combine to grossly distort the overall contribution of Venezuela to forecast regional or global market growth.
We first looked to address the disproportionate impact the country was having on regional and global forecast data in March through the use of a revised set of historical exchange rates. However, in light of the further deterioration in the economy and the mid-term outlook we believe it is necessary to go further.
Therefore, data on most consumer goods and services categories in Passport now incorporates Venezuelan data in which exchange rates for the forecast period have been fixed at 2016 levels. Similarly, we have posted inflation to zero from 2017 onwards. All consumer goods and services categories will have been updated in Passport by the end of October.
We believe that when viewing forecast data in current terms this is the most effective way of allowing you to include Venezuela in regional or global totals, while “neutralising” the impact of Venezuela in current terms regional and global forecasts. We feel that the resulting forecast data is more reflective of the relative size of the Venezuelan market at a regional and global level when viewed in current terms. At a single country level, we continue to research and deliver in Bolivars. Inflation can be stripped out of historic and forecast data. Viewing historic and forecast data in constant terms provides an understanding of real growth and is most often the preferred view. We will continue to keep Venezuela data under review, as well as monitor inflation more closely on all global economies, lest hyperinflation in any other market threaten to skew regional or global forecast totals.