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Venezuela’s slump is worst in history

Venezuela’s crisis has been marked by corruption, hyperinflation, one of the world’s highest homicide rates, food and medicine shortages and the largest exodus “in the recent history of Latin America,” according to the UN Refugee Agency.

Its chances to recover may start with President Nicolas Maduro stepping down or being forcibly removed — either by the opposition or through foreign military intervention. But that would just be the first step to get the ruined economy on the road to recovery. A major course of economic shock therapy will be required.

Venezuela’s hyperinflation rate increased from 9 million percent to 10 million percent since 2018, according to the International Monetary Fund, though it is expected to decline to back below 1 million percent due to recent moves by the country’s central bank.

But the economic situation remains dire. The IMF says the cumulative decline of the Venezuelan economy since 2013 will reach 65 percent this year — for 2019 the annual decline forecast has increased from 25 percent to 35 percent. The five-year contraction is one of the worst in the world in the last 50 years and one of the few that was not caused by armed conflicts or natural disasters, the IMF stated.

Analysts believe that in order to regain control over Venezuela’s monetary system and zero out hyperinflation, drastic decisions will need to be taken.

“Venezuelans who have been suffering all of this time are going to be faced with a very dramatic, very draconian policy aimed at bringing their monetary system under control,” said Dr Eduardo Gamarra, professor of politics and international relations at Florida International University.

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