Plummeting GDP, soaring unemployment, inflation and collapse of the national currency: the new bulletin on the current trends in the global economy published by the Analytical Center looks at the economic situation in Venezuela, one of the most developed nations in Latin America and a member of the OPEC.
In 2014-2016 Venezuela faced a serious socio-economic crisis that was caused to a large extent by the fall in the global prices of oil, the commodity that makes up the bulk of the country's exports. Other causes of the crisis that the experts point to are a direct result of the left-wing populist economic policies the country have been pursuing since the late 1990‑s and which were to a large extent made possible by the soaring export revenue from the high oil prices between 2004 and 2014. However, even when the global oil prices were at their highest in 2010-2014, Venezuela still could not balance its budget, the experts stress.
When the oil prices dropped, it was a clear demonstration of how risky it was to keep expanding budget spending in a situation where the only real source of budget revenue was a single exported commodity subject to large price fluctuations. Problems with Venezuela's oil industry and lack of investments in oil only exacerbated the decline in export revenue in 2014-2016. IMF estimates and national statistics suggest the crisis is only going to get worse in 2016-2017: The GDP keeps falling, unemployment is on the rise and the inflation is about to develop into hyperinflation as the value of the national currency keeps dropping. At the same time, the measures the government is taking are insufficient, while many of them, such as strict foreign currency regulations, additional and excessive issues of currency and bouts of nationalization in the economy, are only making the crisis worse, the experts are sure.
For more see the bulletin "In Focus: Crisis in Venezuela"
For other issues of our bulletin on current trends in the global economy see Publications.
Photo: from open sources