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People embrace during a vigil to honor those killed during anti-government protests, Caracas, Venezuela, July 13, 2017 (AP photo by Ariana Cubillos).

Hyperinflation Is Crippling Venezuela, but Maduro Has No Interest in Fixing It

Tuesday, Jan. 23, 2018

Until recently, the hyperinflations that inflicted staggering economic costs in South America in the 1980s and 1990s seemed like a thing of the past. But that was before Venezuela, where inflation hit triple digits last year, at 652 percent. Without policy changes from the government, the International Monetary Fund forecasts inflation rates accelerating to 2,349 percent this year and 3,474 percent in 2019. Even these forecasts may be conservative, with the price of selected items already increasing by 80 percent in the first week of January.

While normal hyperinflations take place through excessive monetary creation—the government printing more and more money—Venezuela’s hyperinflation is more severe because it also features a sharp decline in the supply of goods as the economy has shrunk sharply each year since the oil price collapse in 2014. According to the IMF, in 2016 alone economic output fell by 16.5 percent. At the end of 2017, the contraction of Venezuela’s economy was the region’s largest ever recorded. Today per capita incomes in Venezuela have fallen back to levels not seen since the 1950s. ...

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