Venezuela inflation 2016 at 800%, GDP narrows 19 percent

Economy - Mohit Shah - Jan 23,2017

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venezuela inflation 2016 at 800 percent gdp narrows 19 percent


As per recorded figures, the consumer prices in Venezuela rose 800 percent in 2016, while the economy dwindled by 18.6 percent.

Venezuela is facing the sharpest decrease in 13 years and the worst inflation which is deteriorating the country on a major level.

The continued slump in oil prices has transformed the OPEC nation's once-prosperous-economy into a diminished state with widespread product shortages leading the population to skip meals and wait hours in food queues.

Nearly all of Venezuela's hard currency is dependent on the oil sector. In 2016, it shrank 12.7 percent, according to a portion of a document containing the figures. The document also revealed that the non-oil sector shrank by 19.5 percent.

President Nicolas Maduro's government blamed the current conditions on an "economic war" controlled by political adversaries gaining assistance from the United States. As problems advanced, the central bank has blocked releasing quarterly and monthly economic indicators.

Maduro accused opposition-linked businesses of artificially creating economic tensions. The president said that the inflation is the result of risky price-gouging by selfish capitalists.

Venezuela’s currency controls have left businesses incapable of obtaining dollars, meaning merchants battle to stock shelves and factories remain idle with the lack of raw materials and machine equipment. Last year, Venezuelans began crossing into neighboring countries such as Brazil and Colombia to access groceries.  

Presently, the investors worry that Venezuela may not be able to extend servicing its foreign debt, which has made its bonds among the highest-yielding emerging market securities, handing investors on average 21 percentage points.

This situation is hampering all aspects of daily life in the country. Food shortages, restrictive medical supplies and rampant cases of theft is currently trending in Venezuela. Moreover, the military is forced to guard grocery stores, which is indeed quite saddening. If this condition prevails, the IMF will have to bail out the country in the coming few months.