A woman holds a wad of bills to pay her bus fare in Caracas, Venezuela. Ariana Cubillos/Associated Press
Economic crisis

Venezuela heading towards 1,000,000% inflation, according to IMF

The South American nation is in the midst of a five-year economic crisis.

INFLATION IN VENEZUELA could reach one million percent by the end of the year as the country’s historic crisis deepens, according to the International Monetary Fund.

The once wealthy oil-producing nation is in the midst of a five-year crisis that has left many of its people struggling to find food and medicine, and driven masses across the border for relief into neighbouring Colombia and Brazil.

Meanwhile, shortages in electricity, domestic water and public transport continue to plague millions of Venezuelans, who also have to deal with a high crime rate.

The head of the IMF’s Western Hemisphere department, Alejandro Werner, revealed that the country’s economic turmoil now compares to Germany’s after World War I and Zimbabwe’s at the beginning of the last decade.

“The collapse in economic activity, hyperinflation, and increasing deterioration … will lead to intensifying spillover effects on neighboring countries,” he wrote in a blog post.

If the prediction comes to pass, Venezuela’s economy will have contracted by 50 percent over the last five years, Werner said, adding that it would be among the world’s sharpest economic falls in six decades.

Socialist President Nicolas Maduro regularly blames Venezuela’s poor economy on an economic war that he says is being waged by the United States and Europe.

Despite deep economic and political problems, Maduro won a second six-year term as president in a May election that his leading challenger and many nations in the international community don’t recognise as legitimate.

The IMF estimates that Venezuela’s economy could contract by 18 percent this year, up from the 15 percent drop it predicted in April.

This will be the third consecutive year of double-digit decline, the IMF said.

Werner said the projections for Venezuela are based on calculations prepared by IMF staff, but warned that they contain a degree of uncertainty that is greater than is normal with other countries.

“An economy throwing you these numbers is very difficult to project,” Werner said at a news conference.

“Any changes between now and December may include significant changes.”

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