Back in January 2016, we showed what the collapse of Venezuela looks like, when in addition to charting Venezuela's imploding currency (which back then was trading at a positive expensive 941 bolivars to the dollar), we presented what at the time was the IMF's latest Venezuela inflation forecast, which stunned us as it surged from 275% in the just concluded 2015 to a whopping 720% at the end of 2016.
Fast forward nearly two years until today, when the IMF released its latest estimate of what it believes will happen to Venezuela's economy in the coming year and a half. What is striking, besides the fact that Venezuela has somehow still managed to avoid bankruptcy, is that the IMF now expects Venezuela's hyperinflation to reach a staggering 2,349% in 2018, after rising by "only" 626% this year, the highest estimate for any country tracked by the IMF. While the South American country stopped reporting economic data in 2015, the IMF estimates that last year inflation clocked in around 254%, a number which is set to soar in the coming years for obvious reasons.
At the same time as residents scramble to find alternative currencies to the local paper which will lost all of its purchasing power over the next year, the IMF predicts the “intensification of the political crisis in Venezuela” will lead to a further decrease in economic output. As a result, GDP is expected to shrink 6% in 2018, after dropping an estimated 12% in 2017.
And, as oil production declines and uncertainty increases, unemployment is forecast to increase to about 30% in 2018, also the highest and followed by South Africa’s 28% and Greece’s 21% .
As Bloomberg adds, the Bolivarian Republic isn’t current with most of its key economic statistics, leaving economists scant data to crunch.
Of course, a far better indicator of the hyperinflation in Venezuela is not some forecast from the always wrong IMF, but what is taking place on the country's currency black market, where as of today, 1 dollar buys 26,808 bolivars on the black market, up from 3,164 at the start of the year, or a nearly 9-fold loss in purchasing power in under a year.
Before Venezuela’s new legislative super body took over the functions of the country’s only remaining opposition-run institution this year, the sidelined National Assembly had started publishing its own inflation index due to the lack of official data. Bloomberg’s Cafe Con Leche Index puts the annual rate at 650%.
Meanwhile, as we wait for the long-overdue Venezuela bankruptcy, here is a photo of an empty carton of eggs sitting on an empty shelf at a supermarket in the Chacao district of Caracas: the sad culmination of every socialist regime.