Macroeconomic Forecast Venezuela

August 2007 | Macroeconomic Forecasts

Considering the current economic climate, July's 0.5% monthly increase in consumer prices was rather moderate. Indeed, it brought annual inflation down sharply to 17.2% y-o-y (from 19.4% y-o-y in June), it's slowest pace in 2007 so far. Though something of a relief, this downturn was anticipated, and due primarily to a cut in VAT from 11% to 9% implemented on July 1. As such, we do not believe this represents the start of a sustainable period of disinflation, and the demand-pull pressures on prices remain in place. The government's expansionary fiscal policy, is among the chief sources of inflation, and

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