Cry bloody Maduro: Venezuela’s economy shrinks by half
Once one of the richest countries in the region, it has plummeted into an economic and humanitarian nightmare
Venezuela’s economy has halved in size in six years, analysis by the International Monetary Fund has found.
Further contractions in 2019 will bring the cumulative decline in GDP since 2013 to more than 50%.
The Latin American nation has been gripped by hyperinflation and a humanitarian crisis since Nicolás Maduro became president following the death of Hugo Chávez almost six years ago. Once one of the richest countries in the region thanks to its abundant crude reserves, it has been rendered virtually unable to extract and export oil.
Maduro has been condemned for his economic management, which has resulted in extreme weight loss for millions of people and soaring infant mortality, according to a study in The Lancet. The shrinking economy has exacerbated hyperinflation, which exceeded one million percent in 2018 and is set to worsen, the IMF said. Its latest estimate suggested the rate could top 10 million percent.
“Hyperinflation and outward migration are also projected to intensify in 2019. Evolving political developments add another layer of uncertainty to the country’s outlook,” the Washington-based lender of last resort warned.
The United Nations estimates about 3 million Venezuelans have fled since 2015, triggering a refugee crisis in South America. Basic medicines and foodstuffs are in short supply and too expensive for most Venezuelans, 90% of whom are now living in poverty.
Oil production has “plummeted” and non-oil industries are facing “worsening conditions”, the IMF said.
The country has been thrown into further chaos with widespread protests that have left at least 26 people dead. The US has backed the self-declared interim president, Juan Guaidó. Large crowds watched as the 35-year-old was symbolically sworn in on Wednesday, after US Vice-President Mike Pence pledged “unwavering support”. He said Maduro was a “dictator with no legitimate claim to power”.
Helima Croft of RBC Capital Markets, an expert on the country’s oil industry, said: “The quickly devolving situation in Venezuela appears to be approaching some type of tipping point, with mass protests planned throughout the country and junior officer revolts multiplying.”
However, while Maduro was “increasingly imperilled”, he maintained support among the country’s generals, Croft said. As a result, things “could get worse in the near term”.
Even if the regime were replaced by an economically sound government there would be no swift return to prosperity, she said. “The road back for Venezuela will be extremely arduous given the depths of the economic and humanitarian disaster.”
– © The Daily Telegraph