EIRA, a 38-year-old Venezuelan, used to like shopping. Now she stands beside barren shelves in a Caracas supermarket. The average Venezuelan spends 35 hours each month queuing for food. This supermarket’s few products include Kellogg’s Zucaritas, its muscular tiger cartoon strangely pallid in hue—supposedly to make the packaging more eco-friendly but, many Venezuelans reckon, more likely the result of an ink shortage.
The dearth of goods reflects the fact that Venezuela, led by Nicolás Maduro, the president, is in freefall. The International Monetary Fund expects output to shrink by 10% this year and inflation to top 700%. Businesses are prostrate. The country has never been rich, but having the world’s largest oil reserves once meant many citizens could afford foreign brands. Not now. Firms have long grappled with price controls, bizarre labour laws, the threat of expropriation and, since 2003, currency restrictions. Plunging oil prices have further exposed the system’s frailty. As the bolívar’s value has tumbled, firms with profits in the currency have reported big losses—for example, Merck, an American drugmaker, announced a hit to its earnings of $876m for…Continue reading