Venezuelans said goodbye Monday to one of their worst years ever, marked by hyperinflation of more than 1 million percent, foreign sanctions and the growing consolidation of a Castro-styled dictatorship.
And 2019 could be even worse, according to analysts who predict a deeper collapse of the economy and higher levels of violence and repression.
“Venezuela has not hit bottom yet. I am afraid that next year will be even worse,” said Russ Dallen, managing partner of Caracas Capital bank and an expert on Venezuela who has testified before the U.S. Congress. “There’s nothing the government can do to stop this tendency, this vicious cycle.
“The country will continue going around and around in its spiral down into the lowest levels of Dante’s inferno,” Dallen said.
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Venezuela was bad enough in 2018. The economic collapse that started with Nicolás Maduro’s presidency finally exploded last year with an inflation rate of nearly 1 million percent, sharp shortages of food that have more than a third of Venezuelans eating only once a day and 5,000 citizens leaving the country daily.
More than 3 million Venezuelans have already abandoned their country in an exodus described as the worst immigration crisis in the history of Latin America.
The forecasts for the coming year are even worse. Estimates by the International Monetary Fund, the United Nations and other multilateral organizations point to an inflation rate of more than 10 million percent in 2019; an 18 percent drop in the Gross Domestic Product; a deeper collapse of the oil industry; an increase in the already high levels of violence; and the departure of another 2 million Venezuelans.
Experts also predict new and tougher foreign economic sanctions on the Maduro regime starting Jan. 10, when he starts a new term in office won in elections rejected by much of the international community because of broad evidence of fraud and other illegalities. He was first elected president in 2013.
One of the key concerns is Venezuela’s plummeting oil production, once the principal motor of its economy. Production stood at nearly 3.4 million barrels a day when the late Hugo Chávez won the presidency in 1998, but today barely reaches 1 million barrels and could drop to 500,000 by the end of 2019, said Diego Moya-Ocampos, lead Americas analyst for the London-based IHS Markit.
That low production and the continuing drop in private economic activity could lead to the collapse of the health system, the power network and the water and other public services — areas already hard hit by the economic crisis.
The sector that appears to be in the best shape to withstand the crisis is precisely the one that experts identify as the main cause of the country’s turmoil: Chavismo.
Venezuela is ruled by an outlaw regime that has replaced its falling oil revenues with income from drug trafficking, illegal mining and gasoline smuggling, Moya-Ocampos said. That income “makes it possible to maintain Maduro in power,” he added.
And Maduro will remain in power “unless the military stops supporting him or a regional force helps in some way to reestablish constitutional and democratic order in Venezuela.”
The economic crisis and the international pressures all but guarantee that 2019 will be a year of great turbulence. On one side, the growing international rejection of Maduro will consolidate with his swearing-in. The United States will likely brand Venezuela as a government that promotes terrorism because of its tight connections to Colombia’s National Liberation Army guerrillas and Hezbollah.
But domestic pressures are also expected to tighten as the economy continues to deteriorate. That does not mean that new waves of protests will automatically lead to a regime change in the next year. Maduro has survived massive protests in the past and has been preparing to do it again.
“The year 2019 will be one of more and more protests. But the stronger the protests, the stronger the repression,” said Moya-Ocampos.
The future will depend, he added, on what proportion of the armed forces will continue supporting Maduro on his road to a Castro-styled dictatorship, or if at some point they will decide to stop supporting him.