Macroeconomic Forecast Costa Rica

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BMI View: Due to increased pressure on the Banco central de Costa Rica to intervene in the forex market to prop up the Costa Rican colon, we have revised our foreign reserve forecasts for this year and next. We now see foreign reserves at US$3.5bn by end-2008 from a previous projection of US$4.3bn. The numbers for 2009 are similarly weaker, at just US$3.7bn (from US$4.5bn previously). We stress, however, that should the central bank maintain its current crawling peg exchange rate regime, and investor sentiment remain subdued, the risks to our forecasts are weighted to the downside.