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The collapse of Venezuela bypassed on the depth of the collapse of the economy with the collapse of the Soviet Union

Коллапс Венесуэлы обошел по глубине обрушение экономики при развале СССР

The collapse of Venezuela’s economy in 2014 is considered the largest in the economic history researchers from the Institute of international Finance (IIF). The depth of the failure it has surpassed the decline during the collapse of the Soviet Union, according to RBC.

Коллапс Венесуэлы обошел по глубине обрушение экономики при развале СССР

Photo: Reuters

The economic collapse of Venezuela “almost unprecedented” in world history, the only comparable in the depth of the fall episodes — Zimbabwe from 1998 to the present day and the collapse of the Soviet Union in the early 1990s, says the Institute of international Finance based in Washington.

As Deputy chief economist of the IIF Sergi, Lanau, the decline of Venezuela’s GDP to date, deeper than any country of the former USSR in the early 1990s.

The worst failure was in Ukraine — more than 50% from 1992 to 1999. The Venezuelan economy collapsed by 2019, more than 60% in 2014.

IIF stipulates that after 2016 there are no official estimates of Venezuelan GDP. The Venezuelan government has stopped to reveal the macroeconomic indicators on a regular basis, once to power in 2013 came Nicolas Maduro. The IMF in may 2018 issued Venezuela official disapproval in connection with the public lack of economic statistics.

“The experience of the former Soviet Union shows that the recovery of Venezuela in the scenario of economic policy change will be slow,” says the IIF. On average, former Soviet States it took 12 years to return to pre-crisis levels of real GDP.

The situation in Venezuela is complicated by the enormous hyperinflation. Unofficial estimates of price growth in the country is very high even by the standards of the hyperinflation in the former Soviet Union and in Latin America in the 1980-1990’s, says IIF. But history shows that hyperinflation can relatively quickly end during the transition to stabilization policy, which usually involves either the adoption of target levels of money supply or fixed exchange rate.

Venezuelan disaster

  • The oil production of Venezuela in March 2019, according to secondary sources OPEC (considered to be more reliable than the direct messages of the authorities), fell to 732 thousand barrels. a day — 46% lower than in 2018 (1,354 million barrels. per day), and 62% lower than in 2017 (1,9 million Barr.).
  • 87% of Venezuelans live below the poverty line and 61% in extreme poverty (data for the project of the Venezuelan universities ENCOVI for 2017).
  • Venezuela has the highest number of murders on 100 thousand persons of the population of 81.4 (data from the Venezuelan Observatory of violence, OVV, 2018); however, the number decreased compared to 2017 (89 killed per 100 thousand population).
  • Since March 7, 2019, the country continues a massive power outage that affected up to 20 of the 23 Venezuelan States.
  • In 2017, the infant mortality rate in Venezuela has increased by 30% and maternal mortality by 65% (data of the European Commission).
  • 3 million Venezuelans have emigrated from the country in 2015, or about 8% of the population (UN data).
  • According to the latest estimates of the International monetary Fund in April 2019, GDP of Venezuela in 2019 will fall to 25% after falling 18% from a year earlier. The recession in the country will continue at least until 2024 — more than ten years.
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