The International Monetary Fund recently announced that inflation in Venezuela is predicted to hit one million percent by the end of this year, a startling figure despite the ongoing socioeconomic crisis that has already crippled the economy and caused widespread hunger, malnutrition, and frustration with a government that refuses to acknowledge the extent of the crisis, and their role in creating it.
Venezuela has been on track to fall into a socioeconomic crisis since Hugo Chavez’s presidency during the early 2000s; Venezuela’s primary export is oil, and an oil market boom during this time saw increased revenue, which was spent indiscriminately on unsustainable programs. Following Chavez’s death in 2013, his hand-picked successor Nicolas Maduro continued to spend arbitrarily while tightening foreign currency controls, driving foreign companies out of the country, and defaulting on a number of government loans. After oil prices dropped significantly in 2014, the country’s economy struggled to stay afloat and – along with other government-mismanagement – resulted in today’s crisis.
Consequently, Venezuela’s economy has been in a deep recession since 2014, that has steadily grown worse in the past four years to arrive at this “largely symbolic” one million percent inflation rate. The national currency, the Bolívar, has lost almost all of its value, and prices for basic goods have rocketed up at unprecedented rates, constantly increasing every few days, and making them inaccessible for ordinary citizens. The black market has grown in the absence of these basic goods, and today, one U.S dollar costs 3.5 million Bolívars on the black market.
The IMF has stated that Venezuela’s poor economy is the result of drops in oil prices and “large macroeconomic imbalances.” The government has regularly denied their role in the collapsing economy and blamed the U.S and wealthy individuals who have waged an “economic war” against Venezuela.
An estimated 90% of the country’s population is now living in poverty as a result of the failing economy. Food is extremely difficult for many to come by, increasing malnutrition amongst children and the elderly, and increasing infant and maternal mortality rates. Unfortunately, medicine is also scarce, both for patients and hospitals. Monthly wages are a pittance and no longer enough to survive on, which has caused an estimated two million Venezuelans to flee the country since 2015, further draining the country.
Venezuela’s economy has entered a state similar to those of Germany after World War One and Zimbabwe during the Global Recession of 2008 and 2009, both of which also suffered the effects of hyperinflation. However, whether or not Venezuela is also able to eventually recover, depends in large part on the government’s future responses and actions, which seems unlikely following Maduro’s recent contested election win, which will see him govern for another six years, in an economy that has left very few Venezuelans adversely affected.
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