- Caracas moves up to top position again this quarter as the most expensive expat destination worldwide
- Very little change up and down in the city rankings in the top ten list
Caracas, Venezuela moves up to top position again this quarter as the most expensive expat destination worldwide. The adjustment plan that investment banks in the country had forecast President Nicolás Maduro would implement which included rate unification, an increase in the gasoline price, monetary discipline and tax reform has not happened. End April saw public expenditure jump by 20% in real terms; while between late March and early April the central bank provided VEB 75 billion (USD 11.9 billion) in funding to (state-run oil company) Pdvsa. Foreign currency control is not likely to end with the result that no forex rate unification can be implemented, hence the parallel forex market will continue to exist.
The following issues are resulting in an imminent economic recession for Venezuela:
1. The first quarter of this year saw the start of the economic collapse. The production chain in manufacturing and production lines will keep breaking with companies only having dollars for one part of production and not have enough for other parts. Rebuilding the production chain could take longer than the government thinks and will be very expensive.
2. The economic collapse has now caught up with the country. A fall in the industrial production of the country, with the assumption that it could fall by two digits in the manufacturing and construction sectors, this has a significant weight on the purchasing power resulting in the forex deficit.
3. There is a lack of decision-making by the existing and highly fragmented government, with many groups struggling for power all with vested interests that are clearly separated from Venezuela’s reality. Decisions that are made are not implemented.
4. During non-electoral periods it is natural to cut excesses, where decision making is important and implementation of these decisions should be undertaken, these are not happening within the Maduro government.
5. Debt growth has occurred amid exorbitant oil prices. The debt service to oil exports ratio has jumped from 7% in 2007-2008 to almost 25% this year. This debit service to the oil exports ratio can be managed but may lead to higher volatility and vulnerability if oil prices fall. The debt service stands at USD 15 billion, just for this year.
For expatriates to Venezuela, the rampant inflation, product shortages and tight government controls on foreign exchange have once again pushed Caracas, Venezuela to the top of the list of the most expensive cities globally.
Other highlights include Luanda, Angola falling from the first position to number two, but this is due to the economic issues and recession in Venezuela. While there has been very little change in any of the other city rankings, see table below:
Top 10 City Rankings (all 13 baskets) Change
| Rank | Location July 2014 | Location April 2014 | Location July 2013 |
|---|---|---|---|
| 1 | Caracas, Venezuela | Luanda, Angola | Zurich, Switzerland |
| 2 | Luanda, Angola | Caracas, Venezuela | Luanda, Angola |
| 3 | Oslo, Norway | Oslo, Norway | Hong Kong, China |
| 4 | Hong Kong, China | Hong Kong, China | Geneva, Switzerland |
| 5 | Singapore, Singapore | Singapore, Singapore | Tokyo, Japan |
| 6 | Zurich, Switzerland | Zurich, Switzerland | Monaco, Monaco |
| 7 | Geneva, Switzerland | Geneva, Switzerland | Sydney, Australia |
| 8 | Monaco, Monaco | Monaco, Monaco | Singapore, Singapore |
| 9 | Sydney, Australia | Tokyo, Japan | Manhattan, New York, USA |
| 10 | Tokyo, Japan | Sydney, Australia | Hamilton, Bermuda |
The biggest mover up the rankings is Banjul in Gambia, which has dropped to become the 461st most expensive location in the world.
The biggest mover down the rankings is Tashkent in Uzbekistan. Tashkent has risen to be the 582nd most expensive location in the world.
The cheapest country in the world to live as an expat is Thimphu in Bhutan.
Top Ten City Rankings Excluding Housing, Education, Medical and Transport
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