The International Monetary Fund (IMF) has released a concerning prediction regarding the Venezuelan economy. According to them, if the country continues to print money in order to cover their massive gap in budget, their inflation could rise up to a baffling one million percent.
Alejandro Werner, head of the Fund’s Western Hemisphere department, stated that such a level of inflation has rarely been seen throughout history, and recalled Germany’s situation during the early 1920’s. Werner warned Venezuela of a potential decrease of eighteen percent in their national economy this year alone. This is due to an increasingly failing oil industry from the country, which has caused double-digit decreases for three years in a row now. Werner stated his announcements through a blog post, where he stated:
The collapse in economic activity, hyperinflation, and increasing deterioration in the provision of public goods as well as shortages of food at subsidized prices have resulted in large migration flows, which will lead to intensifying spillover effects on neighboring countries.”
As the IMF mentioned, Venezuela’s economic struggles relate a lot to the collapse of crude oil prices four years ago, a change from which they have yet to recover. Not only were they hurt because of their reliance to oil exports for economic revenue, but for the fact that authorities have yet to change legislation surrounding it and making rightful adjustments.
However, the country’s administration has refused to take the blame for their economic situation. Rather, President Nicolas Maduro has constantly blamed the crisis on intervention from their political opponents, both national and international. This led many citizens to flee from their country to combat hunger and inflation. The situation has only worsened with the administration’s refusal to public economic records and projections, which have caused for Venezuelan economists to rely on international organizations to give them the information.
The IMF has recently been releasing reports expressing its concern towards the situation of the global economy. Days before the Group of Twenty summit, they stated that the world’s economic output could possibly decrease in $430 billion by the end of the decade, especially if the trade wars between the U.S. and many other countries continue.
In fact, they argued that the tariffs are not even beneficial to the United States, who could find themselves to face an unmanageable amount of retaliatory tariffs from several countries. The director of the fund urged world leaders to work their situations via diplomacy and international cooperation since these measures would not have a positive outcome.
Featured image via Flickr/U.S. Department of the Treasury
