IMF: Venezuela will post the highest inflation in the hemisphere

[spanza]

Economy
The International Monetary Fund (IMF) reduced its growth forecast for 2009 in the Andean countries; although it considers that, like the rest of Latin America, the group of South American countries will show signs of stabilization and recovery in 2010.

In its "World Economic Outlook," the IMF notes that, as a whole, all the Andean countries will grow less or nearly at the same rate as expected six months ago. The report stresses that the pace of recovery will not be uniform.

For instance, Venezuela will continue to post the highest inflation rate in the Western Hemisphere because of strong public spending and relaxed monetary policy, Efe reported.

The 4.8 growth of Venezuela's real GDP in 2008 will not be the same in 2009, since the economy will shrink 2.0 percent, and in 2010, with an expected decline of 0.4 percent.

Six months ago, the IMF predicted a 2.2 percent decline in 2009 and 0.5 decline in 2010.

Venezuela will post a double-digit inflation rate (29.5 percent in 2009 and 30.0 percent in 2010). However, these figures are lower than expected six months ago.

Despite the predictions made in IMF's latest report, the Venezuelan economy will maintain a current account balance surplus, although it will only amount to 1.8 of GDP in 2009. In 2010, it will increase to 5.4 percent.

http://english.eluniversal.com/2009/10/01/en_eco_esp_imf:-venezuela-will_01A2822731.shtml

[Braulio]

1. Venezuelan Economy is hurting

The problem with the Venezuelan economy is the relatively low oil prices and the government's hostility towards private enterprise.

The Chavez government is containing inflation better than many expected by selling petro-dollars into the "grey market", but they're still pumping the economy by overspending, so the economy is overheated AND at the same time it's shrinking a bit.

Observers point out oil production continues to drop, and because the non oil economy is gradually shrinking due to the government's hostility towards private investment, it seems the country's per capita GDP is going to decline for the foreseeable future (unless Venezuelans stop having so many children, and/or Chavez sees the light, tosses out his marxist buddies, and follows Lula's lead).