In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as they usually switch to more stable foreign currencies. When measured in stable foreign currencies, prices typically remain stable. Effective capital controls and currency substitution (“dollarization”) are the orthodox solutions to ending short-term hyperinflation; however there are significant social and economic costs to these policies. Ineffective implementations of these solutions often exacerbate the situation. Many governments choose to attempt to solve structural issues without resorting to those solutions, with the goal of bringing inflation down slowly while minimizing social costs of further economic shocks.
Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in the Caribbean Sea. Venezuela comprises an area of 916,445 km2 (353,841 sq mi), and its population was estimated at 29 million in 2022. The capital and largest urban agglomeration is the city of Caracas.
The economy of Venezuela is based primarily on petroleum. Venezuela is the 25th largest producer of oil in the world and the 8th largest member of OPEC. Venezuela also manufactures and exports heavy industry products such as steel, aluminum, and cement. Other notable manufacturing includes electronics and automobiles as well as beverages and foodstuffs. Agriculture in Venezuela accounts for approximately 4.7% of GDP, 7.3% of the labor force and at least one-fourth of Venezuela's land area. Venezuela exports rice, corn, fish, tropical fruit, coffee, pork and beef. Venezuela has an estimated US$14.3 trillion worth of natural resources and is not self-sufficient in most areas of agriculture. Exports accounted for 16.7% of GDP and petroleum products accounted for about 95% of those exports.
Hugo Rafael Chávez Frías was a Venezuelan politician and military officer who served as president of Venezuela from 1999 until his death in 2013, except for a brief period of forty-seven hours in 2002. Chávez was also leader of the Fifth Republic Movement political party from its foundation in 1997 until 2007, when it merged with several other parties to form the United Socialist Party of Venezuela (PSUV), which he led until 2012.
Caracas, officially Santiago de León de Caracas (CCS), is the capital and largest city of Venezuela, and the center of the Metropolitan Region of Caracas. Caracas is located along the Guaire River in the northern part of the country, within the Caracas Valley of the Venezuelan coastal mountain range. The valley is close to the Caribbean Sea, separated from the coast by a steep 2,200-meter-high (7,200 ft) mountain range, Cerro El Ávila; to the south there are more hills and mountains. The Metropolitan Region of Caracas has an estimated population of almost 5 million inhabitants.
The Bolivarian Revolution is a political process in Venezuela that was led by Venezuelan President Hugo Chávez, the founder of the Fifth Republic Movement and later the United Socialist Party of Venezuela (PSUV), and his successor Nicolás Maduro. The Bolivarian Revolution is named after Simón Bolívar, an early 19th-century Venezuelan revolutionary leader, prominent in the Spanish American wars of independence in achieving the independence of most of northern South America from Spanish rule. According to Chávez and other supporters, the Bolivarian Revolution seeks to build an inter-American coalition to implement Bolivarianism, nationalism and a state-led economy.
Petróleos de Venezuela, S.A. is the Venezuelan state-owned oil and natural gas company. It has activities in exploration, production, refining and exporting oil as well as exploration and production of natural gas. Since its founding on 1 January 1976, with the nationalization of the Venezuelan oil industry, PDVSA has dominated the oil industry of Venezuela, the world's fifth largest oil exporter.
Petrodollar recycling is the international spending or investment of a country's revenues from petroleum exports ("petrodollars"). It generally refers to the phenomenon of major petroleum-exporting states, mainly the OPEC members plus Russia and Norway, earning more money from the export of crude oil than they could efficiently invest in their own economies. The resulting global interdependencies and financial flows, from oil producers back to oil consumers, can reach a scale of hundreds of billions of US dollars per year – including a wide range of transactions in a variety of currencies, some pegged to the US dollar and some not. These flows are heavily influenced by government-level decisions regarding international investment and aid, with important consequences for both global finance and petroleum politics. The phenomenon is most pronounced during periods when the price of oil is historically high.
Economic collapse, also called economic meltdown, is any of a broad range of bad economic conditions, ranging from a severe, prolonged depression with high bankruptcy rates and high unemployment, to a breakdown in normal commerce caused by hyperinflation, or even an economically caused sharp rise in the death rate and perhaps even a decline in population. Often economic collapse is accompanied by social chaos, civil unrest and a breakdown of law and order.
Chronic inflation is an economic phenomenon occurring when a country experiences high inflation for a prolonged period due to continual increases in the money supply among other things. In countries with chronic inflation, inflation expectations become 'built-in', and it becomes extremely difficult to reduce the inflation rate because the process of reducing inflation by, for example, slowing down the growth rate of the money supply, will often lead to high unemployment until inflationary expectations have adjusted to the new situation.
The Republic of Venezuela was a democratic republic first established in 1953, and replaced in 1999 by the Bolivarian Republic of Venezuela. Venezuela saw ten years of military dictatorship from 1948 to 1958. After the 1948 Venezuelan coup d'état brought an end to a three-year experiment in democracy, a triumvirate of military personnel controlled the government until 1952, when it held presidential elections. These were free enough to produce results unacceptable to the government, leading them to be falsified and to one of the three leaders, Marcos Pérez Jiménez, assuming the Presidency. His government was brought to an end by the 1958 Venezuelan coup d'état, which saw the advent of democracy with a transitional government under Admiral Wolfgang Larrazábal in place until the December 1958 elections. Prior to the elections, three of the main political parties, Acción Democrática, COPEI and Unión Republicana Democrática, with the notable exclusion of the Communist Party of Venezuela, signed up to the Puntofijo Pact power-sharing agreement.
Venezuela has the world's largest proven oil reserves at an estimated 304 billion barrels as of 2020. The country was previously one of the world's largest exporters of oil, but the oil industry saw a significant decline since its peak in 2012.
The history of Venezuela reflects events in areas of the Americas colonized by Spain starting 1502; amid resistance from indigenous peoples, led by Native caciques, such as Guaicaipuro and Tamanaco. However, in the Andean region of western Venezuela, complex Andean civilization of the Timoto-Cuica people flourished before European contact.
When elected in 2013, Nicolás Maduro continued the majority of existing economic policies of his predecessor Hugo Chávez. When entering the presidency, President Maduro's Venezuela faced a high inflation rate and large shortages of goods that was left over from the previous policies of President Chávez. These economic difficulties that Venezuela was facing were one of the main reasons of the current protests in Venezuela. President Maduro has blamed capitalism for speculation that is driving high rates of inflation and creating widespread shortages of staples, and often said he was fighting an "economic war", calling newly enacted economic measures "economic offensives" against political opponents he and loyalists state are behind an international economic conspiracy. However, President Maduro has been criticized for only concentrating on public opinion instead of tending to the practical issues economists have warned the Venezuelan government about or creating any ideas to improve the economic situation in Venezuela such as the "economic war".
The 2010s oil glut was a significant surplus of crude oil that started in 2014–2015 and accelerated in 2016, with multiple causes. They include general oversupply as unconventional US and Canadian tight oil production reached critical volumes, geopolitical rivalries among oil-producing nations, falling demand across commodities markets due to the deceleration of the Chinese economy, and possible restraint of long-term demand as environmental policy promotes fuel efficiency and steers an increasing share of energy consumption away from fossil fuels.
India–Venezuela relations are the international relations that exist between the Republic of India and the Bolivarian Republic of Venezuela.
An ongoing socioeconomic and political crisis began in Venezuela during the presidency of Hugo Chávez and has worsened during the presidency of his successor Nicolás Maduro. It has been marked by hyperinflation, escalating starvation, disease, crime and mortality rates, resulting in massive emigration from the country.
The Venezuelan economic crisis is the deterioration that began to be noticed in the main macroeconomic indicators from the year 2012, and whose consequences continue, not only economically but also politically and socially. The April 2019 International Monetary Fund (IMF) World Economic Outlook described Venezuela as being in a "wartime economy". For the fifth consecutive year, Bloomberg rated Venezuela first on its misery index in 2019.
Hyperinflation in Venezuela is the currency instability in Venezuela that began in 2016 during the country's ongoing socioeconomic and political crisis. Venezuela began experiencing continuous and uninterrupted inflation in 1983, with double-digit annual inflation rates. Inflation rates became the highest in the world by 2014 under Nicolás Maduro, and continued to increase in the following years, with inflation exceeding 1,000,000% by 2018. In comparison to previous hyperinflationary episodes, the ongoing hyperinflation crisis is more severe than those of Argentina, Bolivia, Brazil, Nicaragua, and Peru in the 1980s and 1990s, and that of Zimbabwe in the late-2000s.
Viernes Rojo in Venezuela refers to Friday, 17 August 2018, when President Nicolás Maduro announced a series of economic reforms known as "Program of Recovery, Growth and Economic Prosperity", in response to increasing hyperinflation. This event is also known as Paquetazo Rojo or Madurazo by some media outlets. These reforms include the introduction of the a new currency with five fewer zeros, increase the minimum wage based on the Petro and increase VAT to 16%. According to President Maduro, these reforms have the goal of recovering the population's salary in two years through the Economic Recovery of Growth and Prosperity program, to eliminate the fiscal deficit and to eliminate the use of paper money.
