By Carlos Camacho
CARACAS -- In spite of a steep and sustained increase in oil prices, Venezuelans are just a couple years short of being poorer than they have ever been in recent history. Much poorer, according to the World Economic Forum (WEF), than when Hugo Chavez was first elected President in 1998, triggering the still ongoing Bolivarian Revolution with promises of economic growth and welfare.
The mismanagement of current head of state, Nicolas Maduro, is what can roll back everything achieved under Chavez, WEF stated Tuesday as Venezuelans faced the world’s highest inflation rate, a disastrous humanitarian crisis, rampant crime and a looming sovereign-debt default.
But it wasn’t always so, WEF stated, reminiscing how Venezuelans were once sitting pretty in a planet devastated by violent conflict, and not too long ago, either.
“By 1950, as the rest of the world was struggling to recover from World War II, Venezuela had the fourth-richest GDP per capita on Earth. The country was 2x richer than Chile, 4x richer than Japan, and 12x richer than China!” the WEF said.
“By 1982, Venezuela was still the richest major economy in Latin America. The country used its vast oil wealth to pay for social programs, including health care, education, transport, and food subsidies. Workers in Venezuela were among the highest paid in the region”, according to WEF.
The ascent of Chavez combined with fortuitous world events between 1999 to 2013 when oil prices soared to previously unknown heights saw Venezuela’s GDP nearly quadruple, from $100 billion to around $400 billion. Sadly, Chavez and his successor Maduro not only did not save any of that windfall, but spent wildly on social programs (aimed at keeping them in power, according to the opposition), took on $150 billion in debt, and nationalized, expropriated and in general mismanaged the economy. Nowadays, Venezuela produces roughly half the oil it was producing in 1999 and the GDP has been dropping for several quarters and it will keep on falling, according to most analysts.
Or to hear WEF explain it, “today, Venezuela has one of the poorest major economies in Latin America – and as the current crisis rides itself out, the IMF foresees it getting far worse. By 2022, the organization predicts Venezuela’s GDP per capita (PPP) will be just $12,210, which would be a massive economic setback – the Venezuelan economy would be even poorer than it was many years before the Chávez era started.”
Venezuela relies on oil for 95% of all the hard currency it receives. And the country imports something like 90% of all the food it consumes. That combination “means that any fluctuations in oil price can be the difference between immense wealth and near-poverty.”
A near humanitarian crisis “is extremely disheartening to see in what was once one of the richest countries on the planet,” WEF laments.“
And while the current condition of Venezuela is a tragedy in itself, the country’s inability to live up to its true economic potential is nearly just as devastating.”