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Venezuela’s economic crisis is so dire that most people have lost an average of 19 pounds

About a third of the country is skipping meals to get by.

Members of the national guard control people as they queue to buy eggs in Caracas.
Getty Images

Venezuela’s multi-year economic crisis produces grim stories of scarcity and suffering month after month. Still, new data capturing the woes of the once well-heeled South American nation is shocking: According to new results from an annual national survey, nearly three-quarters of respondents reported losing an average of 19 pounds between 2015 and 2016.

That’s one of a number of astonishing findings from the country’s National Survey of Living Condition, which is conducted by three major Venezuelan universities and other research groups. The survey also found that the portion of respondents who said they ate two or fewer meals increased threefold, climbing from 11.3 percent in 2015 to 32.5 percent in the past year — around 9.6 million people in a country of roughly 30 million are eating at this rate.

Venezuela has been unable to pull out of an economic tailspin that began in 2014, after oil prices around the world plunged. Combined with the government’s shortsighted fiscal policy and overreliance on imports that it can’t afford to keep up, the economy has ground to a halt.

Inflation is skyrocketing — the International Monetary Fund estimates that the country’s inflation is expected to rise 1,660 percent this year and 2,880 percent next year. Shortages of food, medicine, and many basic items abound in what was once the richest country in South America per capita in the 20th century. Malaria is ravaging a country that was the first in the world to eliminate the disease in its populated areas.

Now there’s evidence that the economic chaos is translating into a malnutrition crisis, with people increasingly struggling to secure food as they wait desperately for the economy to recover.

Venezuela’s crisis has many roots

There are several reasons Venezuela is where it is today. The first one is tied to the plummeting of global oil prices since 2014, which wreaked havoc on the country’s economy.

Venezuela has the largest proven oil reserves in the world, and that feature has long been at the core of its economic well-being. Since the early 20th century, its economy has experienced booms and busts based on how much oil could be sold for on the global market.

Between about 2004 and 2014, global oil prices skyrocketed, and gave Venezuela the biggest sustained oil revenue windfall it has ever received. Under the socialist firebrand Hugo Chávez, the government used the surge in revenue for ambitious social spending that invested heavily in education, health, and anti-poverty programs.

But oil is as much a curse as it is a gift for many countries, and Venezuela is a prime example of it. It relied entirely on oil exports to drive growth and did little to invest in domestic production. Instead, it relied on imports for many of its most basic goods and services. So when oil prices plunged, so did Venezuela’s economy, which had put all its eggs in one, well, barrel.

Alejandro Velasco, a scholar of Latin American history at New York University, believes Chávez’s model of socialism that he implemented during that era of the oil boom exacerbated the country’s oil dependency. “His system of nationalizations and regulations really strangled the already meager productive apparatus of Venezuela,” he explained during an interview in January. He says the problem isn’t socialism per se, but rather “petro-socialism”: The real gains that marginalized Venezuelans saw through increased social spending were ultimately undermined by a refusal to generate sources of growth other than oil.

Chávez’s spending regime also left the country acutely vulnerable to emergency. Ricardo Hausmann, director of the Center for International Development at Harvard's Kennedy School, notes at the New York Times that Chávez’s government failed “to put money aside for a rainy day but instead, over-spent and quintupled the public foreign debt.” When the price of oil fell, it left the government “with no savings and no access to financial markets because of over-indebtedness.”

Chávez’s bid to make Venezuelan democracy more participatory has caused the state to pour huge sums of resources into election campaign seasons since the turn of the millennium. Every year and a half or so, some kind of referendum or election on a regional or national level takes place, and the government tends to spend a fortune on the campaigns surrounding it. This wasn’t in and of itself a cause of the crisis, but rather was symptomatic of the lack of government discipline that helped set the stage for it.

The response of the government to the decline in oil prices has made the situation worse. As the country was rocked by lower oil prices, imports dropped, and people used their money to chase after fewer and fewer products with increasingly marked-up prices. So the government printed out more money to ensure people had enough money in their pockets. But ultimately the combination of the huge increase in the money supply and the sluggish rate of imports has fueled inflation further.

Velasco’s perspective on the current Venezuelan crisis is that it’s the latest manifestation of the country’s old addiction to oil — one that’s surfaced before under other governments, not just socialist ones. “The problem isn’t ideology — it’s dependence,” he says.

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