What does it look like to have inflation of 10 million percent? When something that cost US$1 now costs US$100,000, is there even a way to calculate the impact?
After seeing prices surge an already-unthinkable 1,000 percent last year, hyperinflation in Venezuela’s imploding economy is set to hit nearly 1.4 million percent this year, the IMF forecast in its World Economic Outlook released on Monday.
However, next year, that hyperinflation is expected to leave earth’s orbit, hitting 10 million percent, a figure so large and improbable, readers of the report had to count the zeroes to make sure they had the correct number.
Photo: Reuters
It is so bad that Venezuela was left out of the inflation calculations for the region and for all emerging markets since it would throw off the average.
After years of economic mismanagement and with the vital oil industry nearly at a standstill, Venezuela has seen tens of thousands of people flee the country daily, increasingly desperate to find food and medicines, flooding into neighboring Colombia and Brazil.
The Venezuelan economy contracted 14 percent last year and is expected to fall another 18 percent this year, but the good news — if it can be called good — is that with little room left to fall it is only forecast to shrink 5 percent next year, the report said.
GDP per capita is estimated to have declined by more than 35 percent over 2013 to last year and is projected to decline by close to 60 percent from 2013 to 2023, the IMF said.
With notable understatement, the IMF said: “Hyperinflation is expected to worsen rapidly, fueled by monetary financing of large fiscal deficits and loss of confidence in the currency.”
Venezuela devalued its currency by nearly 100 percent on Aug. 20.
Excluding Venezuela, inflation in emerging and developing nations is expected to reach only 5 percent this year, the IMF said.
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