Chávez re-election to deepen Venezuela’s economic problems

Hugo Chávez’s re-election as President of Venezuela is likely to result in a sharp sell-off in the bond market over the coming days and a 40-50% devaluation of the bolivar before year-end. More importantly, it means a continuation of policies that have lead to severe structural problems in the economy and a sharp drop in oil prices could lead to a balance of payments crisis during his next term.

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