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Venezuela vote: Game-changer or policy paralysis?

The celebrations are barely over for Venezuela's opposition parties, who won an historic victory over the ruling Socialists in parliamentary elections this weekend, when the hangover of how to fix the recession-hit country sunk in.

During elections for the National Assembly at the weekend, the socialist alliance led by the ruling United Socialist Party of Venezuela (PSUV) lost its majority to the opposition, made up by a number of centrist parties gathered under the Democratic Unity Roundtable (MUD) banner.

MUD has so far won 99 seats against the Socialists' current tally of 46 seats, Reuters reported Monday morning, with votes in some districts still to be counted.

Venezuelan President Nicolas Maduro speaks to the media following a meeting with UN chief Ban Ki-moon at the United Nations headquarters in New York on July 28, 2015
Spencer Platt | Getty Images
Venezuelan President Nicolas Maduro speaks to the media following a meeting with UN chief Ban Ki-moon at the United Nations headquarters in New York on July 28, 2015

Conceding defeat, the PSUV's leader and Venezuelan President Nicolas Maduro recognized what he called the "adverse results" and blamed the defeat on the "economic war" waged by the opposition.

Henrique Capriles Radonski, a leading figure in MUD who once ran for president, tweeted after the results were announced that "the results are as we hoped. It's irreversible!"

The result is historic because it is the first defeat for the Socialists since Hugo Chavez put the country on a socialist path when he came to power in 1999. He founded the PSUV from a group of socialist parties in 2007 and led it until 2012 when he endorsed then vice-president Maduro as a successor. After Chavez' death in 2013, Maduro then won a presidential election enabling him to continue Chavez goal of socialist revolution.

Since then, the oil-rich country has struggled with external pressures, such as the slump in oil prices affecting its exports, and internal economic turmoil, food shortages and runaway inflation. Shortages became so severe that hotels asked guests to bring their own toilet paper with them, according to media reports.

The economy is expected to contract by 10 percent this year, and by 6 percent in 2016 according to the International Monetary Fund's latest forecasts. The IMF also said that inflation is projected to be "well above 100 percent in 2015," in its October World Economic Outlook.

'Game-changer'

While a majority in the National Assembly in Venezuela will enable the centrists to challenge Maduro's leadership -- although pushing through a referendum on the leadership could be a possibility -- and gives it influence over the budget, it will not be a panacea for Venezuela's ills, according to experts.

Diego Moya Ocampos, senior Latin America analyst at IHS, told CNBC that a new administration in Venezuela was likely to encounter "policy paralysis."

"That the opposition have secured a majority in the National Assembly is a game-changer in Venezuela because it paves the way for the possibility of an opposition eventually taking control of the government," he told CNBC's "Worldwide Exchange" Monday.

"Maduro's administration and the last 15 years of 'Chavismo' have been characterized by a high level of governmental intervention in the economy, a high regulatory burden and a lot of price and foreign exchange control which have certainly had a detrimental effect on the recent environment."

Casting a shadow on the opposition's victory, Ocampos predicted "policy paralysis" going forward.

"The incumbent Chavista administration does not have the political capital to conduct a comprehensive program of reforms on the scale needed such as easing foreign exchange, price controls and the opposition, while having a majority, will not see the legislation that they will hope to pass to limit the government's role in the economy, implemented. I think those are the key dynamics."

Not going quietly

Similarly, Grant Sunderland, Latin America Analyst at risk analysis company Verisk Maplecroft was not optimistic about the result either, predicting that Maduro's party will not take the vote lying down.

"While this election is the biggest test that Chavismo has faced to date, the results of the ballot will not produce any major changes in the business environment in the immediate term," he said in a note ahead of the vote.

"The national assembly is only one branch of government. If the ruling PSUV loses its power in the assembly, the party is likely to weaken the national assembly's powers – this could be done via the outgoing legislators or through the supreme court, which could nullify future laws passed by an opposition-controlled assembly."

In 2015, the government had "quite blatantly shown that it is willing to stack the cards in its favor through a number of tactics" Sunderland noted, including "blocking some opposition candidacies, producing misleading ballots, or disregarding pre-campaign spending and publicity rules."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow CNBC International on Twitter and Facebook.