The International Monetary Fund is predicting that inflation in Venezuela will surpass 10 million percent by the end of 2019, the organization said in its World Economic Outlook report on Monday.
In the latest update to its World Economic Outlook report released at the Fund’s annual meeting in Indonesia, the Washington-based lender predicted that the country’s economy would shrink by five percent in 2019.
“Venezuela’s economy continues to decline for the fifth consecutive year, following a 14 percent drop in 2017,” the report reads. “Real GDP is projected to shrink by 18 percent in 2018 and a further 5 percent in 2019, driven by plummeting oil production, and political and social instability.”
Inflation is expected to surge to 1.37 million percent by the end of 2018, over 30 percent more than estimated earlier. In 2019, consumer prices are expected to rise a staggering 10 million percent, making it comparable to that of Weimar Germany and Zimbabwe in the 2010s.
“Hyperinflation is also expected to worsen rapidly, fueled by monetary financing of large fiscal deficits and loss of confidence in the currency,” the report states. However, the Fund warned that its projections for Venezuela should be “interpreted with caution” due to a lack of official economic data.
Such dire economic news has become the norm in Venezuela, where decades of socialist governance have led the country into an unprecedented humanitarian crisis.
Widespread poverty and chronic shortages of food, medicine, and other basic resources have led to a mass exodus of people into neighboring Latin American countries, stoking tensions across the region and placing additional pressure on foreign governments.
His solution to the hyperinflation crisis has been repeatedly raising the country’s national minimum wage and knocking five zeroes off of the Bolivar currency. Such measures have spiraled the problem further out of control. Despite dozens of minimum wage increases, most people’s monthly pay packet equates to just a couple of dollars a month.
Another major factor in the country’s economic collapse has been a massive fall in oil production, the country’s key economic export, mainly due to mismanagement in its state oil company Petroleum of Venezuela (PDSVA).
Maduro continues to deny the existence of a humanitarian crisis, blaming the country’s economic woes on a supposed “economic war” led by the United States. Addressing the United Nations last month, he declared that Venezuela was “stronger than ever” by boasting about its large reserves of oil and natural resources.