Venezuela may see its inflation rate top 1 million percent in 2018, putting the nation on track to become one of the worst hyperinflationary crises in modern history, according to the International Monetary Fund.
“We are projecting a surge in inflation to 1,000,000 percent by end-2018 to signal that the situation in Venezuela is similar to that in Germany in 1923 or Zimbabwe in the late 2000’s,” Alejandro Werner, director of the IMF Western Hemisphere department, wrote in a post on the agency’s blog, Reuters reports.
Venezuela’s economy has been steadily collapsing following the crash of oil prices in 2014, which left the South American nation unable to maintain a socialist system of subsidies and price controls.
Consumer prices in the country have risen 46,305 percent this year, according to the opposition-run legislature, which began publishing its own inflation data in 2017 because the nation’s central bank had halted the release of basic economic data, Reuters noted.
President Nicolas Maduro says the country is victim of an “economic war” waged by opposition businesses with the support of Washington.
His government routinely dismisses the IMF as a pawn of Washington that puts the interests of wealthy financiers before those of developing nations.
Opposition critics have said Venezuela’s problems are the result of bad policy decisions, including unchecked expansion of the money supply and currency controls that leave businesses unable to import raw materials and machine parts.
The IMF’s Werner warned on Monday that the collapse in economic activity, hyperinflation, and increasing deterioration in Venezuela could “lead to intensifying spillover effects on neighboring countries.”
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