By Campaign Agent Sophia Esquenazi
With the highest inflation rate in the world and consumer prices continuing to rise, Venezuela is facing a dire economic crisis that is expected to worsen. Food and medicine shortages, power cuts, and hyperinflation have struck the country, leaving many to wonder about the future social, political, and economic state of Venezuela.
While the South American country has struggled economically for years, the crisis took a turn for the worse in 2014 when crude oil prices plummeted. Revenues of this commodity accounted for about 95% of the country’s export earnings, causing Venezuela to suffer greatly when prices fell. This overdependence resulted in imported items becoming scarce, businesses increasing their prices, and inflation rising.
Since 2014, the economic situation has worsened. According to the IMF, Venezuela’s inflation rate is likely to reach 1,000,000% by the end of 2018. Domestic production has decreased following years of price control regulations, governmental corruption has persisted under the presidency of Nicolás Maduro, and the government has failed to prevent further currency devaluation. Maduro says that the country is victim of “economic war”’ waged by opposition businesses, however it is due to the corrupt, socialist regime that the country is facing this crisis to begin with. The nation has almost run out of foreign reserves, has lost access to foreign debt markets, and has poor relations with other governments due to political corruption.
Basic goods, such as food and toilet paper are scarce, as Venezuelans line up for hours outside government-regulated markets to often leave with nothing. The lack of affordable food has led to high rates of malnutrition and death. In a five-month investigation by The New York Times, doctors in 17 states across the country said that their emergency rooms were being overwhelmed by children with severe malnutrition. Dr. Huníades Urbina Medina, the president of the Venezuelan Society of Childcare and Paediatrics, stated: “Children are arriving with very precarious conditions of malnutrition.” Dr. Milagros Hernandez said that in “2017 the increase in malnourished patients has been terrible. Children arrive with the same weight and height of a newborn.” Maternal mortality has also increased greatly.
With the economic crisis worsening, many people have left the country. According to United Nations figures, 2.3 million Venezuelans have left since 2014, migrating to neighbouring countries, the United States, and Spain. While the suffering of Venezuelans is expected to worsen in the coming years, many worry that the government will continue to refuse international aid for political reasons. Susana Raffalli, a specialist on food emergencies who consults for Caritas in Venezuela stated: “If they accept the help, they accept that there is a humanitarian crisis here, and officially recognize that their population is vulnerable, and just how much their policies failed them. ”
As the Venezuelan economy continues to deteriorate with its people suffering as a result, many question how the country will escape this crisis. While the answer is not clear, attention must be placed on this situation as it continues to escalate.
Sources and Further Reading
‘How Venezuela's crisis developed and drove out millions of people’, BBC (22 August 2018)
Garth Friesen, ‘The Path To Hyperinflation: What Happened To Venezuela?’ Forbes (7 August 2018)
Brian Ellsworth, Bill Berkrot, ‘IMF projects Venezuela inflation will hit 1,000,000 percent in 2018’ Reuters (23 July 2018)
Meridith Kohut, Isayen Herrera, ‘For five months, The New York Times tracked 21 public hospitals in Venezuela. Doctors are seeing record numbers of children with severe malnutrition. Hundreds have died.’ The New York Times (17 December 2017)
Patrick Gillespie, Stefano Pozzebon, ‘Venezuelans scramble for food, but it's often out of reach’ CNN (27 July 2017)
‘Inflation Rate’ Trading Economics
Image: Nicolas Maduro @flickr