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Venezuela, plagued by a political and economic crisis, will sink deeper into the recession this year with hyperinflation that is expected to climb to 1,000,000% by the end of December, the IMF estimates, a situation that affects more in addition to its neighboring countries.
Venezuelan Gross Domestic Product (GDP) is expected to contract by 18% in 2018, the International Monetary Fund (IMF) said Monday. This is worse than what was estimated in April (-15%).
"We project a surge of inflation of 1,000,000% by the end of 2018, which means that Venezuela is in a a situation similar to that of Germany in 1923 or that of Zimbabwe in the late 2000s, "commented in a blog Alejandro Werner, a senior official of the Washington institution who, in the spring, anticipated inflation of some In addition, neighboring countries are likely to be increasingly exposed to the repercussions of the collapse of the Venezuelan economy because of the shortage of food, the growing difficulties to access care, electricity, water, transport, combined with the problems of insecurity, have caused the population to flee en mbade, especially in Colombia and Brazil.
"Venezuela remains stuck in a deep economic and social crisis" , summarized Alejandro Werner. And in 2018, the oil country will record a double-digit recession for the third year in a row, he said.
The contraction in GDP will be more marked than in 2017 (-16.5%) as oil production, the main resource of the country, collapses, he said.
Venezuela draws 96% of its gross revenues. But its oil production has dropped by at least half in a year and a half for lack of cash to modernize the oil fields.
Crude oil production continued its decline in June, to 1.5 million barrels per day (MMBD), its lowest level in 30 years, the Organization of the Petroleum Exporting Countries recently revealed.
The IMF also points to the circulation of an ever greater number of banknotes, which fuels hyperinflation.
– Heterogeneous Table –
The accuracy of the forecasts remains subject to bail. At the beginning of May, the IMF had ordered Caracas to provide reliable economic data or risk excluding the country from the institution in a "censorship" procedure. Because the institution, which has 189 members, has not been able to carry out an economic mission in the country since 2004. Since then, it receives only parcel data.
The chief economist of the IMF, Maurice Obstfeld, had observed the last week that it was difficult for the neighboring economies to welcome Venezuelans fleeing their country.
"Language is not a problem of course, but these migrants must be absorbed" by the countries that welcome them, a- he explained. This represents a challenge in terms of housing or integration into the labor market
Over a million people have migrated from Venezuela to Colombia in the last 16 months, the majority to escape the political crisis. estimated in mid-June by the Colombian government
In the spring, the Brazilian government estimated that 500 to 1,200 Venezuelans crossed the Brazilian border each day.
For the entire region, Latin America and the Caribbean Alejandro Werner points out that economic recovery is continuing but the picture is very heterogeneous
"While growth is accelerating in some countries (such as Chile and Peru), others are facing weaker demand"
Also the 2018 forecast for the region was revised down to 1.6% (-0.4 points) and for 2019 to 2.6% (-0.4%). 2 point).
The resumption of expansion in Brazil, first p economic growth in South America, should also be less solid (1.8% against 2.3% estimated in April), mainly due to strikes.
The growth forecast for Mexico, the second largest economy, remained unchanged at 2.3%, but the Fund notes the major uncertainties related to the renegotiation of the North American Free Trade Agreement (NAFTA) with the Canada and the United States. This should weigh on the growth of 2019, now estimated at 2.7% (-0.3 points).
As for the third economy of Latin America, Argentina, forecasts are much less optimistic to 0.4% in 2018 (-1.6 points) and 1.5% in 2019 (-1.7 points) after 2.9% last year. The country, which recently received IMF support, suffered a sharp currency devaluation in the spring and worsened investor confidence.
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