Thursday, October 11, 2018

Venezuela's Crazy Hyperinflation Brings Painful Suffering

Venezuela's imploding economy is expected to yield inflation that shoots upwards to nearly 1,400,000 percent by December.

This forecast in the IMF's World Economic Outlook released Monday is dire – reflecting an economic crisis that’s comparable to Germany’s plight after World War 1 and Zimbabwe’s quandary at the beginning of the last decade. 

And in 2019, hyperinflation is expected to leave earth's orbit, hitting 10,000,000%, a figure so large and improbable – readers of the report had to count the zeroes to make sure they had the correct number.

The ominous prediction marks a drastic jump from just last April when the IMF predicted inflation would reach a mere 13,000%. 

The embattled South American country – even with enormous oil reserves – are trapped in a crippling crisis that is already five-years old. It has left many of their citizens unable to afford food and medicine, and where shelves are empty in supermarkets and crime is skyrocketing. 

The grim prognosis means everyday life for Venezuelans is already a painful struggle for survival and their grief will only exacerbate. There's this joke that even if they can become millionaires – they shall still remain poor! 

Many blame the country’s woes on President Nicolás Maduro (left), who in turn, alleges that Venezuela is on the receiving end of an “economic war” waged by Western powers. 

He hurled accusations at private bankers to boot, saying they are smuggling cash into neighboring Colombia as part of an elaborate conspiracy to sabotage the economy. 

Not only that, but he also rejected calls to lift currency controls.

Yet, with unflinching resolve, he continues to tighten his grip on the power he inherited from Hugo Chávez, the country’s late leader, whose charisma carried him through tough times. 

[Note: The 63rd President of Venezuela clearly lacks his mentor’s charm but having said that, he won a second six-year term in the May elections, though his critics and even many countries say the result was illegitimate]. 

To mollify inflation, he takes the easy way out. He simply issues new banknotes with the last three zeroes lopped off – though economists say that will do little to help. 

It’s just tokenism because fast-forward a few months’ time – and Venezuelans will be back in the same sorry situation. 

“The paradox is that this is a country undergoing a deep inflation crisis and yet nobody actually has any cash”, said Geoff Ramsey, assistant director for Venezuela at the Washington Office on Latin America, a US thinktank. “You’re seeing wealthy people pay for parking with granola bars”! 

Despite being blessed with a vast potential oil wealth – yet it will still not give the country a lifeline: their oil industry is beset with bad management, a lack of investment, cashflow problems and a crumbling infrastructure. 

And those who are really suffering from the deepening economic malaise are fleeing. More than a million have arrived in Colombia (The Guardian, UK, July 25, 2018) and others have proceeded to Brazil. 

It looks like a hopeless quagmire in Venezuela and it's not about to get any better, any time soon.

Last evening, I was in Level 2, Tower 1 of the RHB Center in Jalan Tun Razak, Kuala Lumpur to deliver my speech at the RHB Toastmasters meeting. I'm grateful to Kenneth Leong for extending an invitation to me.

This was my penultimate speech from the Competent Communication manual for the forty-ninth time. A CC #9 titled The Power of Power and this represents my project speech #631 todate.  

There were only eleven attendees at this meeting – but the appetite and ardor for learning was unconcealed and palpable. Irrespective of the numbers, I still enjoyed the meeting!

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