(CARACAS, Venezuela) — Inflation in Venezuela could top 1 million percent by year’s end as the country’s historic crisis deepens, the International Monetary Fund said Monday.
Venezuela’s economic turmoil compares to Germany’s after World War I and Zimbabwe’s at the beginning of the last decade, said Alejandro Werner, head of the IMF’s Western Hemisphere department.
“The collapse in economic activity, hyperinflation, and increasing deterioration … will lead to intensifying spillover effects on neighboring countries,” Werner wrote in a blog post.
The once wealthy oil-producing nation of Venezuela is in the grips of a five-year crisis that leaves many of its people struggling to find food and medicine, while driving masses across the border for relief into neighboring Colombia and Brazil.
Shortages in electricity, domestic water and public transportation plague millions of Venezuelans, who also confront high crime, the IMF noted.
If the prediction holds, Venezuela’s economy will contract 50 percent over the last five years, Werner said, adding that it would be among the world’s deepest economic falls in six decades.
Socialist President Nicolas Maduro often blames Venezuela’s poor economy on an economic war that he says is being waged by the United States and Europe.
Maduro won a second six-year term as president despite the deep economic and political problems in a May election that his leading challenger and many nations in the international community don’t recognize as legitimate.
The IMF estimates Venezuela’s economy could contract 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 are based on calculations prepared by IMF staff, but he warned that they have a degree of uncertainty greater than in 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.”