CARACAS, Venezuela, Jan. 8 (Reuters) – Venezuela’s annual inflation rate was 686.4 percent in 2021, indicating a slowing of consumer price increases compared to the previous year, when it was 2,959.8 percent, according to the country’s central bank.
What is the cause of Venezuela’s current crisis?
Venezuela’s crisis is a long-running socioeconomic and political catastrophe that began under Hugo Chvez’s administration and has intensified under Nicolas Maduro’s. Hyperinflation, rising famine, disease, crime, and mortality rates have all contributed to significant departure from the country.
According to economists questioned by The New York Times, the current scenario is by far the greatest economic catastrophe in Venezuela’s history, as well as the worst faced by a country in peacetime since the mid-twentieth century. The crisis is also worse than the Great Depression in the United States, the Brazilian economic crisis of 19851994, or Zimbabwe’s hyperinflation of 20082009. Other writers have compared aspects of the crisis, such as unemployment and GDP contraction, to those in Bosnia and Herzegovina following the 19921995 Bosnian War, as well as those in Russia, Cuba, and Albania following the fall of the Soviet Union in 1991 and the collapse of the Eastern Bloc in 1989.
Due to mounting shortages in Venezuela, Chvez launched a “economic war” on June 2, 2010. Under the Maduro administration, the crisis worsened, exacerbated by low oil prices in early 2015 and a reduction in Venezuela’s oil production due to a lack of maintenance and investment. In the face of declining oil income, the government has failed to curb spending and has responded to the problem by denying its existence and aggressively suppressing opposition. Extrajudicial killings by the Venezuelan government have become common, with the UN reporting 5,287 killings by the Special Action Forces in 2017, and at least another 1,569 killings in the first six months of 2019, with the UN stating that some of the killings were “done as a reprisal for participation in anti-government demonstrations.”
Political corruption, chronic food and medication shortages, business closures, unemployment, declining productivity, authoritarianism, human rights violations, terrible economic mismanagement, and a significant reliance on oil have all exacerbated the issue.
The European Union, the Lima Group, the United States, and other nations have imposed individual penalties on government officials and members of the military and security services in reaction to human rights violations, the erosion of the rule of law, and corruption. The US would eventually broaden its sanctions to include the petroleum industry. Supporters of Chvez and Maduro believe the problems are the product of a “economic war” on Venezuela, which includes “falling oil prices, international sanctions, and the country’s business elite,” while detractors argue the crisis is the result of “years of economic mismanagement and corruption.” The problem, according to most commentators, is caused by anti-democratic administration, corruption, and economic incompetence. Others blame the crisis on the government’s “socialist,” “populist,” or “hyper-populist” policies, as well as their use to maintain political power. According to national and international analysts and economists, the crisis is the result of populist policies and corrupt practices that began under the Chvez administration’s Bolivarian Revolution and continued under the Maduro administration, rather than a conflict, natural disaster, or sanctions.
On all levels, the crisis has had an impact on the average Venezuelan’s life. By 2017, hunger had reached a tipping point, with nearly 75% of the population losing an average of over 8 kg (over 19 lbs) of weight and more than half of the population lacking the income to meet their basic food demands. According to a UN report released in March 2019, 94 percent of Venezuelans live in poverty, and nearly 20% of Venezuelans (5.4 million) will have left the nation by 2021. According to a UN assessment, 25% of Venezuelans will require humanitarian aid in 2019. Venezuela lead the world in murder rates in 2018, with 81.4 people killed per 100,000, making it the world’s third most dangerous country. Following growing international sanctions during 2019, the Maduro government abandoned policies instituted by Chvez, such as pricing and currency controls, resulting in a brief economic recovery before COVID-19 arrived in Venezuela the following year. As a result of the depreciation of the official bolvar currency, the people began to rely on US dollars for transactions in 2019.
According to the national Living Conditions Survey (ENCOVI), 94.5 percent of the population lived in poverty in 2021, with 76.6 percent living in extreme poverty, the highest proportion ever recorded in the country.
What is the inflation rate in Turkey?
Turkey’s inflation rate has risen to a new 20-year high of 54.44 percent in February, higher than expected, as the currency continues to weaken and energy prices rise. According to the Turkish Statistical Institute on Thursday, consumer goods prices increased 4.81 percent over the previous month.
What country has the highest rate of inflation?
Venezuela has the world’s highest inflation rate, with a rate that has risen past one million percent in recent years. Prices in Venezuela have fluctuated so quickly at times that retailers have ceased posting price tags on items and instead urged consumers to just ask employees how much each item cost that day. Hyperinflation is an economic crisis caused by a government overspending (typically as a result of war, a regime change, or socioeconomic circumstances that reduce funding from tax collection) and issuing massive quantities of additional money to meet its expenses.
Venezuela’s economy used to be the envy of South America, with high per-capita income thanks to the world’s greatest oil reserves. However, the country’s substantial reliance on petroleum revenues made it particularly vulnerable to oil price swings in the 1980s and 1990s. Oil prices fell from $100 per barrel in 2014 to less than $30 per barrel in early 2016, sending the country’s economy into a tailspin from which it has yet to fully recover.
Sudan had the second-highest inflation rate in the world at the start of 2022, at 340.0 percent. Sudanese inflation has soared in recent years, fueled by food, beverages, and an underground market for US money. Inflationary pressures became so severe that protests erupted, leading to President Omar al-ouster Bashir’s in April 2019. Sudan’s transitional authorities are now in charge of reviving an economy that has been ravaged by years of mismanagement.
What will the inflation rate be in 2021?
The United States’ annual inflation rate has risen from 3.2 percent in 2011 to 4.7 percent in 2021. This suggests that the dollar’s purchasing power has deteriorated in recent years.
What is the current inflation rate for 2021?
According to Labor Department data released Wednesday, the consumer price index increased by 7% in 2021, the highest 12-month gain since June 1982.
Why is the inflation rate in Venezuela so high?
According to a monetarist, a general increase in the price of goods is a reflection of the money’s worth rather than the worth of the goods. There are objective and subjective aspects to this:
- Subjectively, the people who have the money have little faith in its potential to hold its worth.
Venezuela’s economy began to endure hyperinflation during Nicols Maduro’s first year in office, according to experts. Heavy money printing and deficit spending are two possible causes of hyperinflation. The annual inflation rate in April 2013, the month Maduro assumed office, was 29.4 percent, only 0.1 percent lower than the rate in 1999, when Hugo Chvez took office. The annual inflation rate was 61.5 percent in April 2014. For the first time in its history, the BCV did not issue statistics in early 2014, with Forbes stating that it was a viable approach to distort the economy’s image. The International Monetary Fund (IMF) warned in April 2014 that economic activity in Venezuela was uncertain but likely to slow further, and that “loose macroeconomic policies have resulted in high inflation and a drain on official foreign exchange reserves.” “More major policy reforms are needed to avoid a chaotic adjustment,” the IMF said. According to economist Steve Hanke, Venezuela’s current economy has an inflation rate of over 300 percent, an official inflation rate of roughly 60 percent, and a product scarcity index of more than 25% of items as of March 2014. Inflation numbers for September and October 2014 were not released by the Venezuelan government.
During Maduro’s first year in office, the BCV’s money supply grew at a faster rate, causing price inflation throughout the country. In 2014, the money supply of Venezuela’s bolvar fuerte rose by 64 percent, three times faster than any other economy tracked by Bloomberg News at the time. Venezuelans humorously dubbed the bolvar fuerte “bolvar muerto” (“dead bolvar”) due to its quickly declining value.
Maduro has attributed high inflation rates and chronic shortages of basic necessities to capitalist speculation. He has declared a “economic war,” referring to freshly adopted economic measures as “economic offensives” against political opponents who, according to Maduro and his supporters, are behind an international economic conspiracy. Maduro has been chastised for focusing on public sentiment rather than dealing with the real challenges that economists have warned about or finding solutions to enhance Venezuela’s economic prospects.
What’s the state of Venezuela’s economy?
Economic Development in Venezuela The growth of US sanctions and the price of oil are two essential elements to keep an eye on. The LatinFocus Consensus Forecast panel predicts that the economy will grow by 6.7 percent in 2022, up 0.5 percentage points from last month’s forecast. According to the panel, the economy would grow at a rate of 4.8 percent in 2023.