Paris (AFP) - Fitch Ratings on Thursday lowered Venezuela's credit rating by three notches to CCC, signalling the economically fragile oil-exporting nation is vulnerable to default due to the drop in global crude prices.

Fitch said that while Venezuela "has a track record of servicing debt through periods of high political and financial stress, the lagging policy response to address external pressures and macroeconomic imbalances, and the present decline in international oil prices materially weaken Venezuela's capacity to service debt."

The drop in oil prices by around 50 percent over the past six months has hit the OPEC member hard, with the ratings agency estimating that the country's economy has contracted by nearly 4 percent this year.

Oil exports account for nearly all of the South American nation's foreign currency earnings.

Venezuela's leftist government has imposed price and currency controls, but inflation ran at over 60 percent last month.

Nicolas Maduro, elected to succeed late longtime president Hugo Chavez last year, ordered the budget be slashed, but refused to cut popular housing and food subsidies before legislative elections scheduled for late next year.

Fitch warned that Venezuela had relatively low international reserves at $21.4 billion, and faced difficulties in using them as 72 percent was held in gold and most of this was kept at the country's central bank.

China has loaned $40 billion to Venezuela, but Fitch said China was unlikely to increase this amount.

The ratings agency said Venezuela was not expected to obtain multilateral funding and had no direct access to international debt markets.

"A high level of political polarization, the social impact of the ongoing economic crisis, marked divisions within the government in terms of economic policy, and the expectation of a heavily contested electoral cycle in 2015 could limit policy adjustments and increase the risk of social unrest," said Fitch.

Thousands of activists were arrested and more than 43 people were killed during mass demonstrations against Maduro's government which raged from February to May.

Maduro's popularity has plunged as the economy has slid and prices risen.