Venezuelan inflation heading towards 1,000,000 percent... Bernie and Cortez say it's a success for the "people".

Venezuelan inflation heading towards 1,000,000 percent

By Rachel Koning Beals, Marketwatch

July 24, 2018 | 4:19pm

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Venezuelans exchange bolivars, the currency of Venezuela, into Colombian pesos in order to purchase Colombian goods in Cucuta, Colombia.Getty Images

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Inflation in Venezuela could top 1 million percent by the end of 2018 as its five-year-long economic crisis deepens, the region’s observer at the International Monetary Fund said.

Years of hyperinflation and destitute conditions in the oil-concentrated nation compare to Germany after World War I and Zimbabwe at the beginning of the last decade, said Alejandro Werner, head of the Western Hemisphere for the IMF, in a blog post.

“We expect the [Venezuelan] government to continue to run wide fiscal deficits financed entirely by an expansion in base money, which will continue to fuel an acceleration of inflation as money demand continues to collapse,” Werner wrote.

What’s more, the crisis will lead to intensifying spillover effects for neighboring countries in part as panicked Venezuelans, suffering from food shortages and lacking in health care, electricity, water, transportation and security, cross into Colombia and Brazil and strain their resources, Werner predicted.

Overall, the Latin American region is expected to grow by 1.6 percent in 2018 and 2.6 percent in 2019, up from 1.3 percent in 2017, but lower than the IMF’s projections issued in April. The downgrade comes in part as a drought and currency pressure will hold back Argentina’s economic growth.

Venezuelan President Nicolas Maduro — who won a second six-year term in a Mayelection that his challengers charge was not legitimate — often blames Venezuela’s poor economy on an economic war that he says is being waged by the US and Europe.

And there is evidence that Maduro has sought a workaround to trade sanctions by way of Turkey. Venezuela’s Mining Minister Victor Cano has said the central bank was exporting gold to Turkey rather than Switzerland due to concerns about sanctions. Venezuela exported $779 million of gold to Turkey in 2018, according to Turkish government statistics reported by Reuters. Turkey itself re-elected the long-ruling president Recep Tayyip Erdogan just last month, after which Erdogan expanded his power and reduced that of parliament.