Venezuela has been struggling with hyperinflation for nearly 4 years and an economic crisis for more than 8 years. There are signs that the economy is improving in the oil-rich country, but there are also experts who state that this improvement does not include the poor.
Venezuela has been struggling with a deep economic crisis for years. Vice President Delcy Rodriguez said earlier this year that inflation in the country had fallen to 234 percent in 2022. The Central Bank of Venezuela announced that inflation in 2021 was 686 percent.
Alvaro studies computer engineering at a university in southern Venezuela; He says he has 24 years of experience. In other words, it is in one of the highest-paid profession groups in the university. Alvaro reminds that he received a salary of 37,255 bolivars in 2019, but that year 1 liter of milk was 4,200 bolivars. Exactly 4 years ago, 1 liter of milk was equivalent to 11 percent of Alvaro’s salary. Underlining that the average salary in Venezuela that year was around 18 thousand bolivars, Alvaro states that one-third of the salary in question must be spent in order to buy 1 liter of milk. Alvaro also states that his salary in 2019 is only 2 percent of what he earned 18 years ago. The average worker salary this year is 130 bolivars ($6) per month.
THE LONGEST HYPERINFLATION IS IN VENEZUELA
To date, analysts say Venezuela has broken the record for the longest hyperinflation in the world. Although inflation dropped to 234 percent at the beginning of the year, this is still one of the highest inflation levels in the world. The currency preferred by the people in the country is not the bolivar anymore, but the dollar… Because the bolivar has almost completely lost its value as a result of the hyperinflation that lasted for 4 years. In other words, the bolivar has lost 99.9 percent of its value since 2016.
Inflation in Venezuela was recorded as 4000 percent in 2017, 130 thousand percent in 2018 and 9 thousand 585 percent in 2019.
Many artisans choose to display their price tags in both bolivars and dollars. One of them is 15-year-old Aray Arias Torres. Torres, who runs a small ice cream shop in the capital Caracas, said, “15. “It was my birthday and I was thinking whether I would like a party, a gift, or just enough capital to open a small ice cream shop,” he says.
Expressing that he decided to open an ice cream shop with the money given as a gift by his relatives and friends in honor of his 15th birthday, Torres states that he took this step to help his mother and family earn money.
The use of dollars in shopping in the country created a double standard situation. Venezuelans, who receive their salary in dollars or can obtain dollars from their relatives abroad, can live relatively comfortably. The ice cream Torres sells is still considered a luxury for many, given that the monthly salary is 130 bolivars.
Maduro’s government says the economy grew by 15 percent last year as a result of increased oil production, easing price and exchange rate controls, and allowing more transactions in foreign currency. The Latin American Economic Council (Cepal) explains this data as 10 percent. When the hyperinflation in Venezuela, that is, the last 8 years, in which the gross domestic product has contracted by more than 75 percent, is considered as a huge return, either 15 percent or 10 percent.
But economist Luis Vicente Leon has a concern that economic growth is not being felt by all segments of society.
Leon, who works at a Caracas-based research company, said, “This growth is concentrated in the service, technology and health sectors where there is no foreign trade, as is usually the case. Therefore, neither all sectors nor all classes will feel this growth the same.”
HYPERINFLATION AGAIN?
A group of economists also pointed out that the sudden increase in consumer prices in recent months poses a risk for Venezuela to enter hyperinflation again. At the end of last year, consumer prices had increased by 37.2 percent. Thereupon, a non-governmental organization called Venezuela Finance Observer made a statement and warned that “Venezuela’s economy faces a hyperinflationary danger, which is strengthened by the continued devaluation of the bolivar, carried out by the Central Bank.”
Sources: Euronews, BBC, Bloomberg, Economist, Reuters
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