Macroeconomic Forecast Venezuela

BMI View: Venezuela's foreign reserves levels finished 2011 at US$27bn, a 7% fall from 2010 levels, despite oil prices being close to record highs. Not only was this the lowest nominal reading since 2004, but based on our calculations this took the level of import cover to a 16 year low of 7.5 months. With no let up in expenditure pressures in 2012, and the overvalued currency exacerbating the domestic dearth of foreign exchange, we expect another significant fall over the next 12 months, with reserves set to hit US$22bn by year-end according to our forecasts.

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