Have you seen the projected inflation rate in Venezuela? It is expected to increase 481% this year and by a staggering 1,642% next year. That’s right. Those numbers are correct. The report is from new estimates released Tuesday by the International Monetary Fund. It’s a scary time for Venezuela.
The IMF also forecasts that Venezuela will also have an unemployment rate of 17% this year and nearly 21% next year. Although it is not known yet if the stats that Venezuela will publish when they do their own review will match this number.
If you are having trouble picturing what that unemployment number means, we can say that the last time the unemployment rate hit that high in the United States was during the Great Depression in the 1930s.
It’s clear that Venezuela is in a very severe economic crisis and also a country wide depression.
Inflation has been a huge problem and point for growing concern in Venezuela. Januaury 2016 had the Venezuelan government stating that inflation rose 141% in the year ending in September. We also saw prices for all goods, including milk, sugar and flour, are soaring. It has also created a shortage of goods such as toilet paper and soap. In fact if you plan to travel to the country, many hotels are asking guests to bring their own.
The value of Venezuela’s currency is crashing rapidly. On the black market exchange, where most Venezuelans exchange U.S. dollars for the home currency, bolivars, one dollar equals 1,125 bolivars. A year ago, one dollar equaled 258 bolivars.
Venezuela’s official exchange rate system is complicated and has multiple tiers. One exchange rate allows ordinary folks to exchange one dollar for 306 bolivars, well behind the black market rate.
Socialist President Nicolas Maduro has continued the massive public spending and welfare programs that his predecessor, the late Hugo Chavez, instituted over a decade ago.
However, the country can ill afford them. Its economy is in trouble and plummeting oil prices has only made it worse. Venezuela has about 95% of its exports are oil. The country is overwhelmingly dependent on oil to power its economy.
With oil prices still low, Venezuela’s problems continue to mount. The country can’t pay for basic food or medical imports, leaving many people without basic food items and medicines.The citizens are angry and that’s not a good sign either.
Venezuela’s problems could worsen significantly later this year. The government must pay about $5 billion in a series of debt payments in October and November. The country’s foreign reserves are already at 12-year lows.