Perspectives, 2018 Where is Venezuela going?

angelojcg (47)in #economy • 7 years ago

The economic crisis does not project improvements. The disarticulation of the productive apparatus and the fall in foreign exchange earnings submerge the country in a deep wave of scarcity and inflation that will further affect the pockets of Venezuelans, according to the projections of different national and international financial and economic institutions.

If the forecasts coincide, it is that 2018 does not look anything encouraging for Venezuela. "We have economic indicators of a country at war, without being at war," warned economist Asdrúbal Oliveros moments before presenting the studies of Ecoanalítica, the financial firm he directs, at the International Insurance Meeting on November 23.

For the expert, the deep economic depression, added to the hyperinflation and the risks of the default of the external debt, will set the pattern next year, because until these problems are solved, the deterioration will increase.

Hence, Ecoanalítica predicts that GDP will contract 7.3% in 2018, imports will continue to decline in order to honor the international financial commitments made by the Government, inflation will reach 7.380% and the parallel dollar will be above Bs. 16,000,000.

Oil revenues in freefall

95% of the currencies that the country receives come from oil production, according to calculations of several economists. However, the amounts entering the Venezuelan coffers are becoming smaller.

According to the figures that Petróleos de Venezuela (Pdvsa) reports to the Organization of Petroleum Exporting Countries (OPEC), Venezuela only puts 1,995,000 barrels per day on the market, which, according to the historical record published by the Government, is the figure lowest since the late 1980s.

According to the studies of Torino Capital, the state has maintenance failures that promote the fall of production. "There was a significant drop in the number of active drills, from 44 in September to 39 in October, the lowest level in five years," said the director of the organization, Francisco Rodríguez, through his Twitter account .

Calculated at $ 54.8 the average sale of a barrel of oil, experts estimate that oil revenues fall from 29.7 billion dollars in 2017 to 28.1 billion in 2018.

Unemployment will reach a third of the population

The president of the Federation of Chambers and Associations of Commerce and Production of Venezuela (Fedecámaras), Carlos Larrazabal, predicts the year 2018 "looks hopeless with the increase in unemployment", which could be registered throughout the nation.

"The variable that will affect the most are the attacks that are being given to the commercial sector in recent weeks where prosecutors without rights to defense arrive, and lower prices by 50% and that leads to bankruptcy, workers will not have jobs in January "

In his opinion in 2018, compared to previous years, Venezuela will have the largest number of young people and unemployed adults and holds the administration of Nicolás Maduro responsible for it.

Larrazabal, Invites the National Government to change its current socialist policies to prevent Venezuela from falling into a "hole"..

In its latest projections published in October of this year, the International Monetary Fund (IMF) estimated that inflation would close at 2,529.6% in 2018 and, due to the fall in the country's production capacity, unemployment will hurt 29.8%. % of Venezuelans.

Meanwhile, Torino Capital placed inflation at 5,325%, which will have an immediate effect on the rise in the prices of goods and services in the Venezuelan market.

How long will it take Venezuela to recover from the economic crisis?

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To say that Venezuelans suffer a severe economic crisis that worsens every year is not a simple perception. The data published annually by the Central Bank of Venezuela itself (BCV) attested to this, at least until 2015 when the last official numbers were issued. Therefore, the obligatory questions are when and how long it will take Venezuela to recover.
However, for the experts, this is not an answer that can be given lightly. And it is that the rescue of the Creole economy depends on many elements that could quickly or slowly improve the situation of the country. Or even make it worse.

Factors such as foreign financing; the increase in oil prices; the application of "necessary" institutional reforms and a complete and definitive change of the current economic model by another one that generates confidence in national and foreign investors, could give a 180 ° turnaround to the reality of the country, in at least five years, agree the specialists.

The cause of the crisis

As is known, for several years that the Venezuelan economy has been facing one of the most complex moments in its history. Characterized by a series of increasingly "asphyxiating" control policies, according to different sectors, economic recovery is seen as a distant reality.

With the establishment of the National Constituent Assembly (ANC), and their respective work teams in the economic area, a series of conflicting opinions have begun to emerge between what should be done with the exchange control in Venezuela. While some assure that it is something that must be eliminated, others say that the measure must remain.

A couple of months ago, the president of Hinterlaces, Oscar Schémel, said that "exchange control has not served to control the price of the dollar, price control has not served to control inflation, when excessive controls are presented and they extend over time, generate corruption and unproductiveness ".

This week, the constituent in the economic area again charged against the national administration for not being completely transparent, and being one of the main causes of the situation that Venezuela is going through. In an interview with Union Radio, the expert said that it is time to change a "dogmatic and outdated" exchange policy.

"It has failed, we must change it, revise it, rethink it, rethink it, but not insist on the same error. The debate is not easy, there are many late leftists, "he said.

Not only that, but he also warned that the lack of transparency and government honesty is what is driving the economic crisis, explaining that "You can not define a price policy without defining the causes of the very high inflation, you can not pass a law to promote foreign investment but define the exchange policy, no private investor will come to bring their dollars at the official exchange rate that is light years away from the market. "

Thus, Schémel suggests that the economic situation does not come from the economic war or foreign intervention, as often argued by those who support this type of measures, but is born of a series of dogmas that interfere in areas where they should not influence.

Analysis of the current Venezuelan society and its prospects

The economic processes that have been affecting Venezuela for almost 30 years and where there are many erratic fluctuations in our economy, and parallel to this, political instability, corruption at all levels and the inefficient administration of economic resources by the State, have brought as a consequence a marked deterioration in the living conditions, in general, of the Venezuelan citizen.

Venezuela, with 916,445 km2, is the most urbanized country in Latin America. 87.1% of the population is urban, the majority located in areas of high marginality, in the center and north of the country. According to the National Institute of Statistics (INE), the population of the territory in 2005 was 26,577,423 inhabitants (13,347,732 women and 13,229,691 men) .Today, 2010 is estimated at 28,500,000 inhabitants. Its distribution is constituted by a broad-based pyramid with 43.1% in ages under 20 years and narrow tip with 4.87% of people older or equal to 65 years. The life expectancy of the Venezuelan is 73.2 years in 2005. A literacy rate of 95% is estimated.

There are marked economic and social inequalities. Approximately 80% of the population lives in poverty, a situation that, as we are seeing, will gradually increase. Regardless of the method that is used to calculate the average real income of the Venezuelan worker, the reality is that there continues to be a progressive deterioration of the salary that is accompanied by a sharp reduction in purchasing power.

The phenomenon of marginality has been the object of numerous studies for what can be described under the following points of view:

For the Social Sciences: It was conceived as a sub-standard condition of the housing nuclei of the segments of the urban population and, later, it refers to the social characteristics of these segments, both in the city and in the countryside.

For Anthropology: It has been related to cultural conflicts, the product of rural-urban migrations, which has generated the development of a culture of its own for the survival of a hostile environment.

From the legal point of view: It is related to unregulated settlements or populations, of illegal origin, disordered, product of invasions, whose legal status is ambiguous.

From the spatial point of view: These are areas lacking in basic infrastructure of services, such as peripheral settlements that are not harmonious with the topography, natural conditions, climate, public services and, consequently, as areas whose ecological deterioration affects the entire conglomerate urban.

Finally, from the epidemiological point of view of the marginal population: The marginal neighborhood constitutes an ecological and socially deteriorated area where most of the family groups live whose income is lower than the basic consumption basket, which reproduces itself as a labor force marginal of unstable occupation and poorly paid