World Economy

Venezuela Facing Extreme Recession

Venezuela Facing Extreme Recession Venezuela Facing Extreme Recession

Venezuela’s president is facing increasing pressure as the crumbling economy affects hospital care and other basic services.

 Inflation has risen so dramatically in Venezuela that the government can no longer afford to print more currency. Lines at supermarkets are lengthening even as the goods available dwindle further. Coca-Cola bottling plants have shutdown for lack of sugar. Public schools are closed on Fridays, Aljazeera reported.

Venezuela’s economy is almost entirely dependent on oil exports. Falling oil initially affected the country’s poorest citizens. But as the government’s reserves dwindle and some goods become unavailable even for wealthier Venezuelans, protests have intensified.

President Nicolas Maduro’s opponents have collected enough signatures to trigger a referendum on his presidency. They clashed with riot police earlier this month when Maduro declared a state of emergency, granting himself broader executive power.

Under Venezuelan law, if Maduro is removed in the last two years of his presidency, his vice president will be promoted to finish the term. If Maduro’s opponents can force the vote before the end of the year, there would be an entirely new election in which opposition parties could also run.

Even if Maduro is removed from office, how can Venezuela’s political system, dominated by 17 years of authoritarian rule, be repaired? According to Transparency International, Venezuela is the most corrupt country in the western hemisphere. What will it take to return stability to Venezuela?

  Big Airlines to Suspend Flights

Venezuela is running out of just about everything. Food, medicine, electricity, toilet paper, toothpaste, soap, shampoo—you name it, CNNMoney reported.

And over the weekend at least two large international airlines—Lufthansa and LATAM—said they will suspend service to Venezuela in the coming months due to the economic crisis.

The widespread scarcities and fleeing businesses reflect a country in crisis.

“There’s a shortage of everything at some level,” says Ricardo Cusanno, vice president of Venezuela’s Chamber of Commerce. Cusanno says 85% of companies in Venezuela have halted production to some extent.

Venezuela’s economy is spiraling into extreme recession. It is ironic given that the country sits on the world’s largest proven oil reserves of oil. However Venezuela hasn’t cut back from expensive government spending even as oil prices have lost half its value in the past two years.

The country is under the spell of a drought, it’s battling the Zika virus and people are struggling to get medicine in equipment-scarce hospitals.