And the Inflation Winner is…..Venezuela

The Institute for International Finance is predicting that Venezuela will experience a 42 percent inflation rate this year, one of the highest in the world and the highest in the Latin America and Caribbean region. They report that this will have a heavy impact on the prospects for growth in the country for many years to come.

No kidding. Any economist will tell you that inflation has particularly severe consequences for the poor, which is why the Chavez government, like many predecessor governments, have introduced price controls for many basic foodstuffs. The Venezuelan people are no strangers to the impact of inflation on their daily lives. In the past, high inflation particularly combined with the release of price controls have brought down governments. Could that happen again? What is different now?

Probably the key challenge that Venezuelans face today is their government’s mismanagement of the economy, while at the same time simultaneous closing of much of the space for civil society dialogue. This includes the written and broadcast press, civil society groups and now possibly even the Internet. Combined with the government’s capture of nearly all public institutions, it is difficult to see exactly how Venezuela can arrive at an economic course correction. Polls show that upwards of 80 percent of the population do not want their country to follow the Cuban example, and yet that seems to be where the government is taking the nation.

There are still a few brave souls who risk their futures to dissent from current economic and political policies. Hopefully, they can mobilize what shreds of public debate that are still allowed in Venezuela in order change directions.