http://www.nytimes.com/2015/10/19/world/americas/few-in-venezuela-want-bolivars-but-no-one-can-spare-a-dime.html?hp&action=click&pgtype=Homepage&module=first-column-region®ion=top-news&WT.nav=top-news
Pity the bolívar, Venezuela’s currency, named after its independence hero, Simón Bolívar. Even some thieves don’t want it anymore.
A year ago, one dollar bought about 100 bolívars on the black market. These days, it often fetches more than 700 bolívars, a sign of how thoroughly domestic confidence in the economy has crashed. The minimum wage is 7,421 bolívars a month. That is either a decent $1,178 a month or a miserable $10.60.
The International Monetary Fund has predicted that inflation in Venezuela will hit 159 percent this year (though President Nicolás Maduro has said it will be half that), and that the economy will shrink 10 percent, the worst projected performance in the world (though there was no estimate for war-torn Syria).
Most economists say the problems are caused by the fall in oil prices and by the government’s policies, including strict controls on prices and foreign exchange for imports.
7 comments:
Since the death of Hugo Chavez, Venezuela has been spiraling out of control. A lot of grocery stores do not have food or there are incredibly long lines for the basic necessities. I wonder if this will turn into a Argentina-type situation, with hyper inflation. It's so interesting that a very oil-rich economy is struggling this much.
Venezuela is a country with such high inflation that wages cannot keep up. Lower oil prices are slowing down the economy drastically. Political corruptness is also running out-of-control in this country ever since the death of Hugo Chavez. I believe that Venezuela is nearing towards revolution because of its lack of structure.
Inflation is crazy and the government is not trying to fix neither the economic problem nor the policies. I agree that there probably will be a revolution soon.
It is clear that Venezuela is in an extreme period of hyperinflation, in which all wealth that is left would be transferred to the government (rather than the public). This furthers the plausibility of the government being corrupt. It is practically undeniable that there will be a revolution in the near future. As for the people of Venezuela, it would be the best move for them to flee before the situation is amplified.
Once again we see a country that is plagued by the oil-curse and how it is impossible to avoid economic problems, especially inflation, when they place the large majority of the country in only one industry.
I agree with Macie in the fact that it is nearly impossible to avoid economic short comings when emphasize is placed into only one industry. I think with this, one should also keep in mind that consumer confidence is key. Due to the fact that oil prices dropped significantly, Venezuelan GDP was affected. This, coupled with a rise in political corruptness during the last few years has caused for consumer confidence to plummet. Between the years 2011-2015, consumer confidence peaked at 89; but is now the lowest it has been sitting at only 62 (http://www.tradingeconomics.com/venezuela/consumer-confidence).
I think that in order for Venezuela to get its economy under control, the political corruptness now present in the government needs to subside and emphasize on more than one industry should be implemented into future economic policy. It will be interesting to see what occurs in Venezuela during the next couple of years, especially if oil pries continue to turn downwards.
The fact that the resources to feed its citizens are not available is unacceptable. Violent crime rates have skyrocketed in the country, in part because of the economic crisis but also because of the incompetency of the state's police force. People do not feel safe walking around their own hometowns. The piling on of these economic and social problems can only further anger the citizens, and I wouldn't be surprised if large-scale violence erupted in the political sphere during the national elections in December.
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