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| People of Oil-rich Venezuela are starving because of Socialism. |
The report, entitled “Outlook on the World Economy,” predicts that inflation will reach 1.4 million by December 31, 400,000 percent higher than what they forecast in June this year and over a hundred times faster than the estimate of 13,000 percent in January.
Looking forward, the organization also believes that consumer prices will “increase by 10 million percent over the course of 2019,” explaining that “years of misguided policies coupled with a decline in production in the country’s vital oil industry to seventy-year lows have crashed the economy.”
In 2018, the Venezuelan economy shrunk by a staggering 18 percent, indicating a third consecutive year of double-digit decline that has led to the worst economic and humanitarian crisis in the entire region. The IMF is predicting a 20-percent decline in 2019, meaning the country will have lost half of GDP since 2015.
Widespread poverty and mass shortages of food, medicine, and other basic resources have caused a worsening migration crisis as Venezuelans seek refuge in neighboring countries. The mass flow of people has also begun to stoke tensions in local communities and increased the financial pressure on foreign governments.
Nicolás Maduro’s socialist dictatorship has responded to the economic catastrophe with a number of creative but ultimately ineffective solutions that has included seeking additional loans from allies such as Turkey, Russia, and China and creating its own national cryptocurrency known as the “Petro,” supposedly backed by the nation’s extensive oil and gold reserves.
Maduro’s solution to the hyperinflation crisis has involved repeatedly raising the country’s national minimum wage and taking five zeroes off of the Bolivar currency. Yet despite dozens of wage increases, many people’s monthly salary still equates to just a couple of dollars a month, as inflation continues to spiral out of control.
The worthlessness of the Bolivar and the dire state of the Venezuelan economy has raised speculation that the country will ultimately revert to the U.S. dollar in any post-Maduro regime, following the example of Ecuador who substituted their own currency back in 2000. A growing number of Venezuelan merchants are now only accepting payments in dollars to avoid constant price hikes and the inevitable devaluation of their profits.
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| More than a million Bolivar to buy a pound of tomato in Venezuela. |
The International Monetary Fund is predicting that inflation in Venezuela will surpass 10 million percent by the end of 2019, the organization said in its World Economic Outlook report on Monday. In the latest update to its World Economic Outlook report released at the Fund’s annual meeting in Indonesia, the Washington-based lender predicted that the country’s economy would shrink by five percent in 2019.
“Venezuela’s economy continues to decline for the fifth consecutive year, following a 14 percent drop in 2017,” the report reads. “Real GDP is projected to shrink by 18 percent in 2018 and a further 5 percent in 2019, driven by plummeting oil production, and political and social instability.”
Inflation is expected to surge to 1.37 million percent by the end of 2018, over 30 percent more than estimated earlier. In 2019, consumer prices are expected to rise a staggering 10 million percent, making it comparable to that of Weimar Germany and Zimbabwe in the 2010s.
“Hyperinflation is also expected to worsen rapidly, fueled by monetary financing of large fiscal deficits and loss of confidence in the currency,” the report states. However, the Fund warned that its projections for Venezuela should be “interpreted with caution” due to a lack of official economic data.
Such dire economic news has become the norm in Venezuela, where decades of socialist governance have led the country into an unprecedented humanitarian crisis. Widespread poverty and chronic shortages of food, medicine, and other basic resources have led to a mass exodus of people into neighboring Latin American countries, stoking tensions across the region and placing additional pressure on foreign governments.
Socialist dictator Nicolás Maduro has responded to the economic catastrophe by creating his own national cryptocurrency and seeking additional loans from allies such as Russia and China.
His solution to the hyperinflation crisis has been repeatedly raising the country’s national minimum wage and knocking five zeroes off of the Bolivar currency. Such measures have spiraled the problem further out of control. Despite dozens of minimum wage increases, most people’s monthly pay packet equates to just a couple of dollars a month.
Another major factor in the country’s economic collapse has been a massive fall in oil production, the country’s key economic export, mainly due to mismanagement in its state oil company Petroleum of Venezuela (PDSVA).
Maduro continues to deny the existence of a humanitarian crisis, blaming the country’s economic woes on a supposed “economic war” led by the United States. Addressing the United Nations last month, he declared that Venezuela was “stronger than ever” by boasting about its large reserves of oil and natural resources.
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| Thousands and thousands of starving people are leaving Venezuela everyday. |
