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"Venezuela has the ingredients so hyperinflation is too big"



November 15, 2018 01:15 AM

Poor population, powdered production equipment and severe migrations are the consequences of long hyperinflationary phenomena, while in Venezuela only a fraction of these results were observed. In the twenty-fifth edition of the Economic News Conference, conducted by students of the Andrés Bello Catholic University School of Economics, the experts predicted that in 2019 there would be more intense hyperinflation and more economic degradation.

Economist Luis Oliver has confirmed that the skyrocketing panorama and no one dares to predict that hyperinflation has lasted for a few months is bleak. on the contrary, they foresee a long life, at least for the following year. "Venezuela has all the ingredients, so hyperinflation is too great," he repeated.

He warned that if the daily price remains at 4% – the average between August and September – the second week of June 2019 will return the prices that were before August 20th. ie the 5 zeros taken by the government from the currency with the currency conversion would be recovered.

"Nicolás Maduro has every intention of leading us into world champions of hyperinflation. He has already achieved this in the region, most likely in the rest of the world, and can do even more when he brings together Marxist consultants with the Ecuadorian dollarists in the same room.

The expected inflation for Uruguay in 2018 is 7.2%, the only country except Argentina that will have annual inflation higher than Venezuela's record in just one day. "In the region, it will take many years to have monthly inflation like Venezuela," he said.

Luis Vicente León, chairman of Datanalisis, said the next year would be stronger in economic terms, as there will be more companies that will paralyze the risk of hyperinflation and productive supply shrink.

"For inflation, Venezuela is not worse than it could have been because it had the largest private per capita savings in Latin America." After 1983, we in Venezuela had never had confidence in the conservation of Bolivar. " that 86% of Venezuela believes the country "is bad and very bad".

A negative diagnosis. What experts warn for next year is not just a continuation but a deepening of the serious situation. Economist Omar Zambrano assured the country faces the most severe and prolonged recession in its modern history, except that the nation is blind due to the lack of official numbers.

To show the magnitude of the collapse, Zambrano recalled that from 2012 to 2017 the poverty rate in the 10 poorest parishes in the country rose from 4.1% to 29.9%. According to Anova Consultores, last year there were 26.3 million poor people, whose income was not enough to buy the food basket. The cost of covering the poverty gap is $ 15.3 billion per year.

In 2018, purchasing power collapsed as a result of the accelerating rise in prices. Oliveros added that despite the significant increase in wages that came into force on 1 September, since January the purchasing power of the total wage decreased by 85%.

Henkel García, economist analyst and econometric manager, pointed out that nations are poor because their institutions are not exclusive and to be so, a process of deconcentration of power is essential. "However, Venezuela has two characteristics that explain a lot because we are the way we are: we are an extremely presidential country and a hereditary state, the owner of the main wealth we have. The last straw is that the president can reelect as many times as he wants to name the PDVSA holder directly. "

Father José Virtuoso, the rector of UCAB, who was the first speaker, explained that the word Venezuelan crisis has fallen short because it does not reflect the depth of the drama experienced by the Venezuelans. "The political pact, democracy, productive capacity and satisfaction of our needs are collapsing, so the economic approach is fundamental," he added.

"Maduro intends to lead us to be world champions of hyperinflation, which has already been achieved in the region, most likely in the rest of the world"

Luis Oliveros,

economist


Challenges, recommendations and proposals

Economist Ronald Balza, Dean of the UCAB School of Economic and Social Sciences, has shared challenges, recommendations and proposals for the transition to the Economic News Conference.

– Among the first, he said that he helped to separate the departments of the authoritarian government, to implement and manage the transfer of power and to stabilize and institutionalize emerging democracy.

– Some of the recommendations for the transition he mentioned were: move gradually, successively. promoting convergence of interests, recognizing differences; offering an optimistic and inclusive vision; recognizing how bad it is and finding solutions and creating spaces for dialogue.

– And finally he shared suggestions. Some of them concerned the relationship between humanitarian aid and social programs, such as calculating the amount of transfers to booby to the beneficiaries, identifying distribution channels and geographic location. With regard to the proposals for the public sector budget, it stated that monetary financing should be replaced by exchange rate adjustments and the abolition of indirect subsidies.


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