Inflation in Venezuela could top 1 million percent by year’s end as the country’s historic crisis deepens, the International Monetary Fund said on Monday.
Venezuela’s economic turmoil compares to Germany’s after the first world war and Zimbabwe’s at the beginning of the last decade, said Alejandro Werner, head of the IMF’s western hemisphere department.
“The collapse in economic activity, hyperinflation, and increasing deterioration … will lead to intensifying spillover effects on neighboring countries,” Werner wrote in a blogpost.
Venezuela, a once wealthy oil-producing nation, is in the grips of a five-year crisis that has left many of its people struggling to find food and medicine, while driving masses across the border for relief into neighboring Colombia and Brazil.
Shortages in electricity, domestic water and public transportation plague millions of Venezuelans, who also confront high crime, the IMF noted.
If the prediction holds, Venezuela’s economy will have contracted 50% over the last five years, Werner said, adding that it would be among the world’s deepest economic falls in six decades.
President Nicolás Maduro has blamed Venezuela’s poor economy on an economic war he says is being waged by the United States and Europe.
Maduro won a second six-year term as president despite the deep economic and political problems in a May election that his leading challenger and many countries do not recognize as legitimate.