Venezuelan economy flatlining on fault lines

CARACAS: The autocratic government of President Nicolás Maduro is intensifying its crackdown on dissent, issuing arrest warrants for rebellious mayors, targeting unfriendly politicians and menacing citizens who speak their minds.

Yet if it’s enemies of the state Maduro is after, one threat looms larger than any other. That would be the flatlining economy. The nation is edging towards the economic brink after an internationally condemned election last month created an all-powerful congress loyal to Maduro.

Since the July 30 vote, the value of the bolívar has fluctuated wildly, a significant feat for a country saddled with the world’s highest inflation rate. As a result, prices for staples like bread and tomatoes have doubled in two weeks.

New estimates from Venezuelan data firm Ecoanalítica suggest the economy could shrink 10.4% this year, exacerbating a four-year nosedive that some economists call worse than the US’S Great Depression. Potentially more dangerous, analysts say, is the prospect of a sovereign debt crisis that could bring the country to a new level of economic pain.

The deteriorating situation is sending a fresh jolt of panic through crisis-hardened Venezuelans, who are increasingly blaming Maduro.

“It was after the vote that things went out of control,” said Miguel Gonzalez, a 94-year old retiree in sticker shock this past week while shopping at a Caracas store. In only a few days, he noted, the price of white cheese jumped 21%, and stewing meat surged 31%.

The government normally adjusts pensions and the minimum wage to compensate for inflation. But in a possible sign of empty coffers, it hasn’t done that yet. As anxious Venezuelans bought up US dollars in the week after the vote, the currency depreciated 45% against the dollar.

In the past week, the bolívar clawed back lost ground – but price increases remained in place. – The Washington Post