Published by Economist Intelligence Unit
The president, Nicolás Maduro, has been granted decree powers for the rest of 2015, a move to protect Venezuela against what he calls aggression from the US.
The National Assembly, in which the ruling Partido Socialista Unido de Venezuela (PSUV) has a majority, approved the law on March 15th. It follows similar rulings by Mr Maduro and his predecessor, Hugo Chávez (1999-2013), over the years. This move was a direct response to the US president, Barack Obama, describing Venezuela as a threat to national security earlier this month and sanctioning seven top officials, one of whom was promoted to interior minister in an act of defiance by Mr Maduro.
Many see the goading of the US as a political ploy by the government to distract from domestic problems: annual inflation is at almost 90%, the local currency has fallen by 35% so far this year on the black market and shortages continue to have a major impact. Mr Maduro's approval ratings remain only slightly above 20%, although it remains to be seen just how big an impact the recent anti-US rhetoric will have. Military exercises are currently taking place in Venezuela to counter the "US threat."
Legislative elections are due to take place later this year and, if it is able to pull itself together, the opposition will be able to hold a referendum against Mr Maduro in 2016. However, critics remain disparate. Leopoldo López, a hardline opposition leader, remains in prison, and the government has begun to crack down on others, such as Antonio Ledezma, the metropolitan mayor of the capital, Caracas, who now shares a prison with Mr López.
Impact on the forecast
The PSUV's current majority in the National Assembly means that the latest development will have little impact on our forecast, as Mr Maduro can already pass legislation fairly easily. However, we believe that it is increasingly likely that Mr Maduro will seek to extend these decree powers beyond the end of the year, particularly if the PSUV loses its working majority in the legislative election scheduled for the last quarter of this year.