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Venezuela: Country Economic Forecast: 09 Feb 2012

8 Pages Oxford Economics February 09, 2012 SKU: OFE6801223

As expected, GDP grew by close to 4% in 2011, with year-on-year growth of 4.3% in Q4. And the economy is expected to expand quite strongly this year, supported by new housing projects, social spending plans and a moderate rise in oil output. The economy is benefiting from high oil prices, with the average price of Venezuelan crude reaching US$101 per barrel in 2011. But inflation remains a key concern. For 2012, we still forecast GDP growth of just above 4%, underpinned by robust state spending ahead of October's presidential election. We assume growth of 4.2% in the non-oil economy and 3.2% in the oil sector. Our forecast is in line with the consensus but below the official projection of 5%. The united opposition movement chooses its presidential candidate on 12 February, with Henrique Capriles, Miranda state governor, expected to win comfortably. The opposition needs a good turnout to galvanize its campaign and counter claims that it is a minority whose candidates represent a wealthy elite. The monthly rise in the CPI slowed again to 1.5% in January from 1.8% in December, with annual inflation easing to 26% from 27.6%. But we expect inflation to still be around 25% at end 2012, kept high by abundant liquidity. We are pencilling in a devaluation of the main exchange rate of about 15% in 2012Q4, once the election is out of the way.

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Venezuela: Country Economic Forecast: 09 Feb 2012

Oxford Economics
February 09, 2012

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