Venezuela is Crumbling
Really? It has been crumbling for a while.
Venezuela is Crumbling
Economic misery in Hugo’s populist paradise.
BY Jaime Daremblum
May 14, 2010 12:00 AM
Recent weeks have brought more depressing economic news from Venezuela, where populist leader Hugo Chávez seems intent on destroying not only democracy but also the last remaining vestiges of private enterprise.
On April 21, the Latin Business Chronicle predicted that Venezuela would post the world’s highest inflation rate in 2010, ahead of even the war-torn Democratic Republic of Congo.
On May 5, the United Nations Economic Commission for Latin America and the Caribbean reported that foreign direct investment (FDI) in Venezuela dropped from $349 million in 2008 to negative $3.1 billion last year, “mainly as a result of nationalizations.” In other words, the Bolivarian Republic experienced a net FDI outflow of $3.1 billion in 2009.
On May 7, the Venezuelan central bank released data showing that consumer prices rose by 5.2 percent from March to April. As Bloomberg News noted, this represented the largest monthly increase since 2003. Meanwhile, the annual inflation rate hit nearly 32 percent.
On May 11, the Chávez-controlled National Assembly introduced legislation designed to clamp down on currency trading and strengthen the bolívar, Venezuela’s national monetary unit. “This is a very negative measure for the Venezuelan economy,” Barclays Capital economist Alejandro Grisanti told Dow Jones. “It will increase the pressure on prices and will deepen the contraction of the economy.” In January, Chávez devalued the bolívar in order to facilitate greater social spending. Since then, the currency has plummeted, making Venezuela’s already dire inflation problem even worse.
Economic misery in Hugo’s populist paradise.
BY Jaime Daremblum
May 14, 2010 12:00 AM
Recent weeks have brought more depressing economic news from Venezuela, where populist leader Hugo Chávez seems intent on destroying not only democracy but also the last remaining vestiges of private enterprise.
On April 21, the Latin Business Chronicle predicted that Venezuela would post the world’s highest inflation rate in 2010, ahead of even the war-torn Democratic Republic of Congo.
On May 5, the United Nations Economic Commission for Latin America and the Caribbean reported that foreign direct investment (FDI) in Venezuela dropped from $349 million in 2008 to negative $3.1 billion last year, “mainly as a result of nationalizations.” In other words, the Bolivarian Republic experienced a net FDI outflow of $3.1 billion in 2009.
On May 7, the Venezuelan central bank released data showing that consumer prices rose by 5.2 percent from March to April. As Bloomberg News noted, this represented the largest monthly increase since 2003. Meanwhile, the annual inflation rate hit nearly 32 percent.
On May 11, the Chávez-controlled National Assembly introduced legislation designed to clamp down on currency trading and strengthen the bolívar, Venezuela’s national monetary unit. “This is a very negative measure for the Venezuelan economy,” Barclays Capital economist Alejandro Grisanti told Dow Jones. “It will increase the pressure on prices and will deepen the contraction of the economy.” In January, Chávez devalued the bolívar in order to facilitate greater social spending. Since then, the currency has plummeted, making Venezuela’s already dire inflation problem even worse.
Labels: Economics, Jaime Daremblum, Poverty, Venezuela
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11:59 AM
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