Macroeconomic Forecast Venezuela

Venezuela's real GDP grew by 4% in Q211, down from 4.5% in Q111. The rate of growth places upside pressure on our below-consensus forecast for real GDP growth to reach 1.9% by end-2011. Economic growth in the country has been boosted by elevated oil prices on the international market over H111, which has supported income from oil exports and allowed the government to continue its expansionary fiscal policy. We hold to our forecast for the time being, given our view that rampant price pressures will place downside pressure on the Venezuelan economy. However, sustained oil prices over the next few months could convince us to revise up our GDP growth forecasts for 2011 and 2012.

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