Inflation breaks calculators in Venezuela: they already estimate 1,000,000%

The IMF changed its economic projections; calculates that GDP will fall by 18%, with what will accumulate nearly 48% over the last five years

WASHINGTON.- The International Monetary Fund (IMF) predicts that Venezuela will close this year with a inflation of 1,000,000%, which "The situation in Venezuela is similar to that of Germany in 1923 or Zimbabwe in the late 2000s," said yesterday the director of the Department of the Hemisphere Western. IMF, Alejandro Werner, announcing the new forecasts.

The latest IMF forecast on Venezuelan inflation for this 2018, announced in April, was 13,000%. At that time, Werner himself described the Venezuelan crisis as one of the most important in the history of the modern economy

The IMF believes that the government of Nicolás Maduro will continue to suffer large public deficits financed "entirely". Werner added that Venezuela would continue "with a high budget deficit fully financed by the expansion of the monetary base", ie by the issuance of a new currency, According to IMF technicians

this scenario "will continue to fuel an acceleration of inflation as the collapse of foreign exchange demand continues," the report adds.

The Fund also corrects upwards the forecast of GDP decline for this year. The 15% in which the figure in April now goes to a collapse of 18%, the third consecutive two-digit, "driven by a significant decline in oil production and widespread distortions at the micro level, in addition to major macroeconomic imbalances. "

The cumulative decrease over the past five years is thus 48%.

Werner released the badysis for Venezuela in an entry on his IMF blog before a press conference in Washington.

In its update of Economic Forecasts for Latin America, the IMF warned that the collapse of this country may increase the collateral effects on neighbors who already host a strong flow of money. Venezuelan emigrants.

"The collapse of economic activity, hyperinflation and increasing deterioration of the provision of public services (health care, electricity, water, transportation and security), as well as the shortage of Food products at subsidized prices have resulted in large migratory flows that will intensify the indirect effects in neighboring countries, "warned the director of the Western Hemisphere Department

according to some estimates, up to the end of the year. Three million Venezuelans have left the country due to the difficult economic situation and scarcity.

Nicolás Maduro's regime, which was re-elected in the polls denounced as fraudulent last May, did not go to the polls. has for the moment shown no signs of economic change of direction and blames the United States and the Latin American countries for the economic debacle of the country

Werner pointed out that Both projections are based on technical calculations prepared by IMF staff, but warned that they have a higher degree of uncertainty than other countries.

"An economy that throws you at these numbers is an economy where it is very difficult to project what will be happening today to December, and any change from what we are planning to do. here in December can have very big changes in this projection, "he explained.

The IMF also downgraded its growth forecasts for Latin America from 2% to 1.6% to the projections the lender disclosed in April of this year.

Agencies AFP and DPA