Venezuela is in trouble. Such trouble, in fact, that the central bank (BCV) has not published GDP figures since the beginning of the year and is two months behind with inflation figures. Leaks from inside the BCV suggest annual inflation is now well over 60% and that GDP fell by almost 5% in the first half of 2014. Shortages of food, medicines and other basic goods, including spare parts and tyres for vehicles, have reached critical levels. Representatives of private health clinics say more than half have suspended elective surgery for lack of crucial supplies and parts for medical equipment. The government plans to address shortages by fingerprinting customers to prevent them from buying extra goods to sell on the black market.You can't help but think that this can't end well.
Dependent on oil revenues for 97 out of every hundred dollars in foreign earnings, and on imports for a large part of what it consumes, the country is heavily in debt to foreign suppliers, many of whom have cut off credit. But instead of adopting an adjustment plan, the government has continued to print money and introduce ever more stringent price and exchange controls. Massive price differentials with neighbouring Colombia have fuelled the contraband trade, to which the authorities have responded by closing the border at night.
Saturday, 6 September 2014
You know your economy is in even more trouble when ......
This from the Economist magazine: