By 1929, Venezuela had become the world’s biggest oil exporter and second largest oil producer. Oil drilling started in Venezuela in 1912 and almost immediately transformed the country. Unfortunately there are no simple answers or clear solutions, with little chance of the situation improving in the near future. The situation, rather, can be attributed to decades of economic mismanagement, a surge in populism and a government refusing to admit defeat. Other nations that rely on oil exports have certainly felt some economic pressure from the slump, but none are suffering the same horrifying consequences. While it may be easy to blame the current situation on the sudden drop in oil prices, Venezuela is alone in suffering a crisis this severe. Even more disturbing are the results of the recent Venezuela Living Conditions Survey, which revealed that, due to food shortages, 75 percent of Venezuelans have lost 19lb since the crisis started.
The IMF estimated inflation could hit 1,660 percent in 2017, potentially reaching 2,880 percent in 2018.
BLACKOUTS SKYROCKET AMID POLITICAL UNREST FULL
Suddenly unable to fund the sweeping social programmes that had destroyed the country’s private sector, the full extent to which Venezuela’s economy had been eroded became clear.įar worse has been the effect on the Venezuelan people reductions in poverty have now been reversed ( see Fig 1), inflation is accelerating faster than it can be calculated, and shops now lack even the most basic products. With the price of oil falling from $111 per barrel to less than $40 over the course of mere months, the rivers of black gold that used to carry waves of bolívars into the Venezuelan Government’s pockets completely dried up. However, since 2014, things have been different. According to government figures, poverty in the country fell from approximately 50 percent to 30 percent between 19. In fact, between 20 the country boasted an average annual GDP growth of around five percent. Rich in oil, the country boasted a stable, democratic government and a healthy GDP.
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