World Bank sees Venezuela GDP contracting another 25% by year end

WASHINGTON (AFP) - The economy in crisis-hit Venezuela is expected to contract a further 25 percent in 2019, the World Bank said this week. 

“Real GDP contracted by 17.7 percent in 2018 and is likely to fall by 25.0 percent in 2019, which would imply a cumulative fall in GDP of 60 percent since 2013,” the bank said in its most recent biannual report on Latin America and the Caribbean. 

The report attributes this “continuing implosion” in Venezuela, which has the most oil reserves of any country in the world, to the management of the country’s economy rather than the global drop of oil prices and called the Venezuelan crisis “by far the worst in the region’s modern history.”

Together with declining oil prices, “highly distortionary policies, from price controls to directed lending, a disorderly fiscal adjustment, monetization of the public sector deficit, and overall economic mis-management have led to hyperinflation, devaluation, debt defaults, and a massive contraction in output and consumption” in Venezuela, according to the World Bank.
The bank repeated the estimate that the country would see inflation of 10 million percent by the end of the year, a figure that was already predicted by the International Monetary Fund (IMF) in October. 

Nicolas Maduro has governed Venezuela since 2013, after the death of former president Hugo Chavez who came to power in 1999. 

Maduro’s authority has been under a cloud since January, with more than 50 countries recognizing the head of the National Assembly Juan Guaido’s claim to the presidency in response to what the opposition and some in the international community have called Maduro’s illegitimate reelection last year. 

The report, by the World Bank’s Latin America and Caribbean chief economist Carlos Vegh, stressed the “tragic growth collapse” in the South American country as “economic and social conditions continue to deteriorate rapidly.”

“Hunger and disease are spreading throughout the country,” it said, citing the 90 percent poverty rate (according to unofficial estimates) and highlighting a rising infant mortality rate of 26 per every thousand live births between 2013 and 2017, a rate similar to the 1980s. 

“Crime and violence have also increased substantially, with Venezuela becoming the country with the highest homicide rate in the region (89 homicides per 100,000 inhabitants), a rate almost three times as high as that of countries at war,” it added.