Venezuela inflation to hit 1m per cent by year-end: IMF

WASHINGTON: Amid the financial and humanitarian crisis in Venezuela, the country is expected to see hyperinflation reach epic proportions: a million per cent a year by the end of 2018, the International Monetary Fund (IMF) said on Monday.

And the nation’s economic collapse will increasingly spill over into neighboring countries, the IMF said in its updated regional outlook for Latin America.

“We are projecting a surge in inflation to 1,000,000 per cent by end-2018 to signal that the situation in Venezuela is similar to that in Germany in 1923 or Zimbabwe in the late 2000s,” said Alejandro Werner, head of the IMF’s Western Hemisphere Department.

However, that estimate “has a much higher degree of uncertainty” than most inflation forecasts, he told reporters. Still, whether the rate ends up at 1.2 million or 800,000 per cent “the destruction of prices as the mechanism for allocating resources has already happened”.

Venezuela’s economy is expected to contract by 18% this year, the third consecutive year of double-digit declines and three points worse than projected in May, amid falling oil production, he said in a statement.

That would mean the country that is seeing waves of citizens fleeing the crisis, while those left suffer increasingly from illness, lack of medicines and weight loss from lack of food, will have contracted by 50% in the last few years, one of the few times that has happened in the last half century or more. – AFP