HYPER INFLATION IN ZIMBABWE

Presented by :Pankaj lodhi

HYPERINFLATION ?

In economics hyper inflation is inflation which is very high Or that is “out of control” a condition in which prices increasesRapidly as a currency looses its value.

CAUSES OF HYPERINFLATION IN ZIMBABWE :

Hyperinflation in Zimbabwe began in early 2000 shortly after conflict over white Owned farm land. because eviction of more than 4000 white farmers in the contro--versial land redistribution of 2000.

Its repudiation of debt to the international monetary fund.

Zimbabwe's involvement from 1998 to 2002 in the war in democratic republic of Congo de rained million of dollar from the economy.

Downward spiral of economy because of mismanagement and corruption of the Mugabe regime.

Excessive circulation of money in the country in order to control the inflation, whichIn turn leads to hyperinflation.

GROWTH RATE IN ZIMBABWE

Zimbabwe got freedom in 1980 since than till present time Robert Mugabe was the president of Zimbabwe. economic growth in:- 80’s – ( 5 ) % 90’s – (4.3) % 2000 – (-5 ) % 2001 – (-8 ) % 2002 – (-12 )% 2003 - (-18) % 2004 - (-7 ) % 2005 - (-7 ) % 2006 - (-6 ) % 2007 - (-9 ) % 2008 - (-11) % and later on the condition of Zimbabwe became worse to adverse.

RISE OF INFLATION IN ZIMBABWE :

Inflation year Issue of note

Year/month 1$=ZWD $

112.1% 2001 Z$ 20000 2007

198.93% 2002 Z$ 10000000 2008(jan) 4 us$

598.75% 2003 Z$ 5000000 2008(april) 1.20 us$

132.75% 2004 Z$ 100 (million)

2008(may)

584.84% 2005 Z$ 250(million)

2008(may)

1281.11% 2006 Z$ 500(million)

10 days later

2 us$

66212.3% 2007 Z$ 100(billion)

2008(19th July)

231150888.87%

2008 Z$ 20T. 50T,100T

2009(16th Jan)

On 17th nov 2008 johns Hopkins university prof. Steve H. Hanke estimated the Zimbabwe's Annual inflation rates as 89.7sextillion(1021). Monthly inflation at 79.6 billion%.

100 TRILLION ZW $

CONSEQUENCES OF HYPERINFLATION IN ZIMBABWE

once 1 zw $ = i.59 us $ but latter on in 2008 it came to 500 billion zw $ = 2 us $

Prices in Zimbabwe in November 2008 rise in every 24.7 hours This is the second worst inflation in history after Hungary in 1946.

Major exporter of tobacco and maze became net importer.

80% of population is unemployed

life expectancy in adult in 1990 – 60 and as of now it is 37.

60% of Zimbabwe's wild life died since 2000. Loss of wild life leads to deforestation so loss of tourism industry.

African nations as well as united nations is doing little regarding Zimbabwe's present condition.

FDI is almost nil in Zimbabwe which is the major indicator in growth of any nation.

Prices in Zimbabwe raised to 64 times from 7th nov to 14th i.e. in 8 days.

Cont.

MEASURES TAKEN TO CONTROL INFLATION

More over in starting 2009 on 16th January govt. planned to Issue notes of greater denomination such as 10T ,20T, 50T, and 100T.zw $.

Zimbabwe dollar was suspended on 12 April 2009 And use of more stable currency was allowed such as us$,African rand euro .

On July 30th 2008 the governor RBZ announced that 10 zeros will be removed from Zimbabwean dollar. And zw $ 10 billion Will become 1 dollar after redenomination.

PRESENT SITUATION IN ZIMBABWE :

At the time of independence there were about 1% population of Whites holds 70 % of countries commercial capital . In 1975 there were around 296000 whites where as in 1999 it was around 120000 and in 2002 the number was less than 50000

At present black people make 98% of population.

Government spending is 56.4% of GDP.

Because of use of other stable currencies the rate of inflation has reached almost to 0-3 % But the consequences of this was that even the street vendors Are not accepting zw $.

RECOMMENDATION GIVEN TO CURB THE SITUATION IN ZIMBABWE

Thing in Zimbabwe can’t be changed instantly it will take time

The main problem country is facing is of human resource no economy in the world can grow if it is not having skilled Human resource.

Agricultural land at present is being holed mostly by those who are not of farming background.

In 1990 manufacturing contribute around 23% of GDP but at present it stands no where.

Mining and other resources are also needed to be explored to develop the economy.