Before devaluing the Bolívar, the government was predicting Venezuela would grow by 6% in 2013.
We already addressed how this was way higher than what most other people were predicting, as consensus was forming around a 2.5% figure.
Now that Venezuelans’ purchasing power has taken a massive hit, what can we expect?
To my mind, Harvard-trained economist Francisco Rodríguez is the first top-tier economist to predict a recession. According to this interview with El Nacional’s Blanca Vera, the Bank of America economist predicts growth this year will be -3.6%, i.e., our economy will shrink and we will have a recession.
He goes on to say that, even after devaluation:
- the fiscal deficit is still a whopping 5.3% of GDP;
- Venezuela needs $23 billion in fresh financing;
- inflation will hit 33%;
- government spending is bound to fall, as it has been doing since October’s election;
- poverty will increase, and
- the government will devalue to BsF 8 per dollar soon (he predicts 2014).
So much for those rosy accounts of how Chávez has done wonders for the economy. Not counting the one he inherited, this would be Chávez’s third recession – a dismal legacy, as others have already pointed out.
Let’s put that on his tombstone.