The ongoing Damage to the Venezuelan Economy

Via the BBC:  Venezuela’s annual inflation rises to 63.4%

Venezuela’s annual inflation rate has risen to 63.4%, the highest in Latin America, according to official figures published on Tuesday.

The figures are the first released by the central bank since May, which has led critics to accuse the government of withholding data for political reasons.

Speaking of data withheld:

The central bank did not publish its scarcity index, a measure of goods that are missing from store shelves, but shortages of basic items such as flour, milk and toilet paper continue to be the bane of many shoppers.

[…]

The government in Caracas has not yet revealed its gross domestic product (GDP) forecast for 2014, but a number of international economists have been gloomy in their assessment.

London-based economic research consultancy Capital Economics has predicted that Venezuela’s GDP will contract by a cumulative 5% in 2014-2015.

It also warned of a "growing risk of a much deeper recession and default".

The Maduro government blames anti-government protests in the early part of this year, however the root cause of these problems are self-inflicted by the government itself.  The shortages noted above, for example, preceded the protests.  No doubt the protests did not help, but they hardly caused the problems.

FILED UNDER: Latin America, Quick Takes, World Politics
Steven L. Taylor
About Steven L. Taylor
Steven L. Taylor is Professor of Political Science and Dean of the College of Arts and Sciences at Troy University. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog). Follow Steven on Twitter

Comments

  1. JKB says:

    Oops, gonna need a new flavor of Marxism/Socialism. I wonder how many will be found to have been murdered in the name of this Venezuelan flavor?

  2. Mu says:

    The Venezuelans are learning that running a planed economy with arbitrary prices for goods doesn’t work unless you have an iron curtain to make sure none of the goods leave the country. And iron curtains are hard to build and guard if most your your borders are in the jungle or on the ocean.

  3. OldSouth says:

    I still hear the echoes of all those breathless Leftists, tucked away in the press and academia, who just loved All Things Chavez! Same crew that has loved All Things Castro.

    It is an eternal frustration that no one seems to have the stones to ask these folk to account for their enthusiasm for socialism vis a vis the actual results of socialism.

  4. grumpy realist says:

    Just because Chavez called it “socialist” doesn’t mean what he came up was socialist. It was the result of a brain-damaged incompetent nitwit who thought he know how an economy should be run.

    Sort of like those idiots of the Chicago School of Economics, who have managed over the years to carry out similar destruction upon the US economy.

  5. Neil Hudelson says:

    @OldSouth:

    By all means please ask them. Unless this “them” is a bogeyman you created, it shouldn’t be hard. You’ve seem to have run into these Castro-lovers far more than I have, so please do ask them.

  6. Scott O says:

    @OldSouth:
    I still hear the echoes of all those breathless Rightists, tucked away in their “think” tanks and the conservative entertainment industry, who just loved All Things Bush. Now they say “George who?”.

  7. OzarkHillbilly says:

    @Scott O: I wonder how all these free market fan boys are reacting to the fact that Forbes magazine- Forbes! -has declared Obama- their favorite socialist! -to be head and shoulders above and beyond better for the economy than Saint Ronnie of Reagan?

  8. gVOR08 says:

    @OzarkHillbilly: Same as above, “Forbes? Forbes who?”

  9. Ben Wolf says:

    Economy during the Chavez era ran quite well. What we see now is gross mismanagement by the Maduro government combined with Fed policy draining dollar-denominated capital from Venezuelan investment.

  10. Fausta says:

    @Ben Wolf:
    Chavez. who publicly declared himself a communist since 2002, ran the economy quite well into the ground, while the Venezuelan government has not allowed its own numbers to be verified for almost a decade.

    Chavez made the Venezuelan economy increasingly dependent on oil exports. In 1999, oil accounted for 80% of all exports. Back then the Annual Average Domestic Crude Oil Price (AADCOP) was $16.56. By the time of his death last year, the number had risen to 95% at an AADCOP of $91.17. GDP had to go up, if only because all the eggs in that one basket got pricier; even then Chavez didn’t do all that well:

    From the time Chávez took office in 1999 to 2011 Venezuela’s economy grew by an average of 2.8% per year. During this same period Latin America as a whole grew by 3.3% per year and Brazil grew by 3.4% per year.

    The Fed? Now, nearly 1 million barrels per day (almost one third of the daily 2.3 million barrels of crude OPEC says Venezuela produces) don’t generate revenue: 300,000 bpd go to Cuba, some 100,000 bpd are smuggled into the Colombia by insiders, and 650,000 bpd are sent to China to pay debt. This is even more disastrous when considering how the Venezuelan economy has become more dependent on oil after foreign capital leaves the country and productivity plummets.

    Chavez’s true legacy is a ruined country with murder rates doubling or tripling over a decade.