Hocus pocus economics in Venezuela
NICOLÁS MADURO calls it “a really impressive magic formula”. His paquetazo rojo (big red package) features a new currency that lops five zeroes off the nearly worthless bolívar, a sharp increase in the price of fuel and a rise in the minimum wage of more than 3,000%.
Forget magic. The president’s formula, even with some welcome new bits of realism, will almost certainly fail to rescue Venezuelans from their economic agony.
Venezuela has the world’s worst-performing economy among countries not at war. GDP fell by more than a third between 2013 and 2017. Inflation could pass a million per cent this year, says the IMF. The country with the world’s largest oil reserves cannot import enough food and medicine. Water shortages and blackouts plague cities. More than 2m Venezuelans have fled, unsettling neighbours (see article).
Mr Maduro says this is the fault of “imperialist...