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Macroeconomic Forecast Venezuela

August 2012 | Macroeconomic Forecasts

The Venezuelan government's spending spree of recent years has led to an enormous fiscal shortfall with the fiscal deficit reaching 5.2% of GDP in 2011. We see the nominal fiscal deficit almost doubling in size this year, to 10.1% of GDP ahead of the general election in October. This informs our view that a devaluation of the bolívar fuerte will in all likelihood take place not long thereafter. While we do not rule out a potential devaluation before year-end, our core scenario currently sees the overvalued exchange rate staying flat at VEF4.30/US$ this year, before devaluing towards an average exchange rate of VEF9.00/US$ in 2013.

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