Inflation in Venezuela will be 1,000,000% by the end of 2018!!!

Venezuela - Sep 06 2018

According to the International Monetary Fund (IMF), the inflation rate in Venezuela will surge to 1,000,000% by the end of this year. At this point the actual number doesn’t really matter. The fact is that (hyper)hyperinflation has undoubtedly arrived. The pace of price increases in Venezuela has reached levels comparable to the Weimer Republic in 1923 or Zimbabwe in the late 2000s, the IMF announced on Monday, July 23rd. Venezuela’s currency has been collapsing for years now. Strict capital controls have turned food and medical-supply shortages into a full-blown humanitarian crisis. The IMF forecasts that the economy will contract by 18% this year, its third consecutive year of double-digit GDP declines. Meanwhile, GDP per capita will fall below USD 10,000. “Venezuela remains stuck in a profound economic and social crisis”, the IMF said.

Comparisons to 1920s Germany and late-aughts Zimbabwe are ominous. Zimbabwe ultimately had to abandon its currency after the country started printing 100-trillion-dollar banknotes. In late 2008, prices in the country took just 25 hours to double. In 1923 Germany, the monthly inflation rate was 29,500%. That hyperinflation and the surrounding economic crisis provided an opening for Hitler’s rise to power. What is certain is that it is now too late for President Maduro to take political and economic corrective measures. Let us hope that this crisis does not know the tragic or painful ends of the examples from which it draws its characteristics.

To be continued…

Julien Moussavi, Head of Economic Research – Sources: Beyond Ratings, Reuters

 

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