Caracas — Economists say
Venezuela has come out of a
four-year cycle of hyperinflation, but citizens like pensioner Humberto Reco
are still waiting to see the evidence.
اضافة اعلان
The crisis-wracked South American country ended 2021
with inflation of 686 percent, according to the central bank, meaning the end
of a period of hyperinflation that began in 2017.
Walking through the popular Chacao market in
Caracas, Reco does not see any positive effect on prices.
“They say hyperinflation is over, but where I am,
it’s still there,” said Reco,75. “Honestly, I don’t see any improvement.”
Venezuela’s inflation remains the highest in the
world, and prices are continuing to rise uncontrollably.
According to a widely accepted definition of
hyperinflation from 1956 by late US economics professor Philip Cagan, it begins
when monthly inflation rises by more than 50 percent.
To come out of it, a country needs to keep monthly
inflation increases under 50 percent for an entire year, Cagan proposed.
“According to Cagan’s figures, we’re already getting
out of hyperinflation,” Hermes Perez, a professor of economics at the
Metropolitan University in Caracas, told AFP.
However, US economists
Carmen Reinhart and Kenneth
Rogoff proposed a different hyperinflation parameter of 500 percent a year.
According to them, “there’s a little more to go,”
said Perez.
‘Highest in the world’
What is clear, though, is
that Venezuela’s official inflation figures are heading in the right direction.
The country ended 2017 with 862 percent inflation
before it spiraled out of control in 2018, reaching a mind-blowing 130,000
percent.
In 2019, that was down to 9,500 percent, and then
around 3,000 percent in 2020.
“It’s still the highest in the world,” said Perez,
pointing to the fact that nowhere else in
Latin America has posted more than
double digit figures.
Venezuelans have turned to using the US dollar as much
as possible to mitigate the effects of galloping price increases, shunning the
national bolivar, a move that has helped slow inflation.
The populist-socialist government, which blames its
woes on US sanctions, has even authorized use of the dollar, viewed as a potent
symbol of the hated American imperialism.
Authorities also tried to reduce the budget deficit
in 2018 by relaxing the iron-fisted exchange controls, almost entirely
eliminating the gulf between official and black market exchange rates.
Most experts, though, say there needs to be much
deeper reforms to solve Venezuela’s economic crisis.
Perez, the former head of the exchange office at the
central bank, believes the bank must stop printing money to finance the state
oil company PDVSA following a dramatic fall in oil production from a high of
3.2 million barrels a day in 2008 to as little as 500,000 13 years later.
Several experts believe Venezuela could lower
inflation to as little as 120-300 percent this year.
Daily price increases
But for citizens, that
macroeconomic improvement has yet to filter down to their personal disposable
income.
“People say things are getting harder every day, I
say: ‘No, it’s every minute,’” said Manuel Quijada, 67, a vegetable seller who
says prices rise every week.
Others claim it is daily.
Even the dollar is affected by inflation.
Asdrubal Oliveros, an economist and director at
consultants Ecoanalitica, says Venezuela is registering greater price increases
in dollars than international norms.
The company says prices in dollars rose 40 percent
in 2021 compared to 2020.
Even so, pensioner Marina Dusei, 62, says things
have improved in the last six months, with the dollar stabilizing at between
four and five bolivars.
In the past, it could devaluate spectacularly in a
matter of hours.
Dusei says it has become easier to budget, but “we
don’t go out and buy what we want any more, just what we need.”
Even so, it is a far cry from three years ago, when
rampant inflation left shortages of basic foods and medicines, as well as
failing public services.
“I think things can keep getting better,” she said
optimistically.
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