'The boom is over': Venezuelans lament end of brief dollarization boost

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When Venezuela's economy was showing tentative signs of recovery in 2020, Enrique Perrella thought it was time to open a cafe in eastern Caracas serving coffee, desserts and breakfasts. 'The boom is over,' said Perrella. After a brief recovery on the back of de-facto dollarization, Venezuela's economy is once again falling victim to high inflation, lagging salaries, and decreases in purchases and production of goods, say business owners and analysts.

By Mayela Armas

The government of Nicolas Maduro relaxed currency controls in 2019, allowing more transactions in dollars despite U.S. sanctions. The move led to a slight recovery in 2021 and 2022 after eight years of economic collapse and the migration of some 7.3 million Venezuelans.

"I had to close because in the last two months sales were falling due to less purchasing power ... and more than anything because of increases in taxes and utilities," he said.Other businesses which have survived said they were slashing prices, salaries and profit margins to stay afloat."To keep up operations we had to cut salaries and work fewer days a week," said the owner of a small food factory in the industrial central city of Valencia who asked not to be identified.

"In the first half of 2022 we saw growth facilitated by a decrease in controls and greater use of the dollar, but then that decelerated," said Jesus Palacios of Ecoanalitica. "Structural economic problems like scarce credit, an absence of recovery in public utilities, among others, were not resolved."

 

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