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Caracas is now more expensive than cities like New York, (Photo: Guillermo Ramos Flamerich)
Monday, August 6, 2012
Trade Talk

Caracas More Expensive Than New York


Cost of living, Mercosour, Bolivian Confusion, Reverse Remittances, Honduras Scandal.

BY LATINVEX STAFF

Venezuelan capital Caracas is now more expensive than New York for expatriates, according to Mercer’s latest Cost of Living Survey. 

The survey covers 214 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.

“The growing inflation in Venezuela has made Caracas a more expensive city for expatriates,” Mercer said in a statement.

Venezuela last year posted an inflation of 26.1 percent, the highest in Latin America and the second-highest in the world after Belarus, according to a Latinvex analysis of data from the International Monetary Fund.

Caracas is now ranked as the third-most expensive city in Latin America behind Sao Paulo and Rio de Janeiro in Brazil. Brazilian capital Brasilia ranks fourth in the region. However, the three Brazilian cities have seen an improvement in their cost of living the past year.

“The cost of living in these three cities has fallen slightly since 2011 since the real [Brazil’s currency] has depreciated compared to the U.S. dollar,” Mercer said.

However, Brazil is still expensive. Sao Paulo and Rio rank as more expensive than cities like Shanghai, Beijing and Oslo. Meanwhile, Brasilia ranks as more expensive than Stockholm and Vienna.

Meanwhile, Port-au-Prince (the capital of Latin America’s poorest country Haiti) has become significantly more expensive the past year, jumping 10 places to 101st worldwide. That ranks it as more expensive than cities like Berlin and Miami.

 
From Mercosur to Mercosour?

Twenty one years after its creation, Mercosur may have taken a step towards its own demise, many experts say.  Last week it formally included Venezuela as a member after it had expelled Paraguay for impeaching its president Fernando Lugo in what it dubbed a violation of Mercosur’s democratic platform.

“Many in Brazil commented angrily on the irony of suspending a country for undemocratic processes, and then taking advantage of their absence to welcome Chavez who, Ives Gandra Martins Da Silva, professor emeritus at the University of Mackenzie, argued in Folha (…), has used “every means possible to silence the opposition and the press,” wrote Lucy Jordan in the web site of Americas Quarterly.

Bolivian Confusion

There was much confusion last week about the fate of Coca-Cola in Bolivia. According to reports by Veneuelan government TV station Telesur (and quoted by Venezuela’s official news agency AVN),

Bolivia’s Foreign Minister David Choquehuanca said that Coca-Cola had to leave by the end of the year. “December 21, 2012 is the end of selfishness, of the division,” he was quoted as saying.    “December 21 must be the end of the Coca Cola, and the beginning of mocochinche (soft peach). The planets are aligned after 26 thousand years (...) [and it] is the end of capitalism and the beginning of communitarianism "  However,  officials at Coke said the comments were just a “joke”, according to reports in Chilean media


Reverse Remittances


Millions of people throughout Latin America depend on remittances from relatives in the United States and Spain. However, in a sign of how things are changing, people in the Dominican village of Vicente Noble  are now sending money to their relatives in Spain – hard hit by a major crisis and 25 percent unemployment, according to Diario Libre.

Honduras Resignation

Honduras’finance minister Hector Guillen resigned after his wife was caught transporting $50,000 in cash, a clear violation of the country’s new anti-money laundering laws which prohibit carrying more than $10,000 in cash. “That the Minister of Finance should be so flagrantly flouting the law is clearly unacceptable, regardless of the actual source of the money nor the rationale for holding such large quantities of cash,” IHS Global Insight analyst Laurence Allan says in a comment to clients. “What is perhaps equally startling is that the wife of a government minister was actually stopped and searched, and was unable to extricate herself from police attention before the cash was found. That could indicate that despite the well-founded perception that the Honduran national police suffers endemic corruption, some Honduran police officers do police according to the law.”


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