There isn’t a great deal of data with
which to parse the extent of stagflation in Venezuela, but the relief seen on
inflation and the black market FX rate is likely only temporary, warns
Jefferies. Latin American strategist Siobhan Morden writes in a note Monday
that while a minor increase in U.S. dollars and the closure of the
Colombia-Venezuelan border may help stagflation in the near-term, investors
should not “expect a trend reversal or any lasting relief.” Instead,
hyperinflation still looks like a serious risk next year, as is the potential
for shock to domestic consumption. She expects more aggressive minimum wage
hikes that will feed into the cycle of inflation and have to be repeated every
few months. More…
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