Many Russians still remember the “funny” times of the early 90s, when inflation “ate” almost all of their monetary savings. Classical hyperinflation also occurred in Ukraine in 1993. A kilogram of meat in one of the richest republics of the former USSR then cost one million coupons! But all the economic hardships of the post-Soviet countries cannot be compared with what happened in Zimbabwe.
We will tell you about the features, main causes and consequences of inflation in Zimbabwe in our article.
Inflation and hyperinflation: the essence of concepts
The essence of inflation can be explained in one simple phrase: too much money - too few goods. The main symptom of this economic ailment is a sharp and rapid increase in prices for all manufactured goods and services.
Inflation is usually accompanied by three things. At this time, in the economy of the “diseased” country, national money depreciates in relation to:
- to marketable products.
- foreign currency.
- to gold.
Hyperinflation is one of the varieties of inflation that is proceeding at an extremely high rate. However, different sources provide different criteria for its determination. One of the most unpleasant consequences of inflation and hyperinflation is that as a result, the population loses almost all of their monetary savings.
The cause of inflation may be the monopoly of the state or large firms in determining prices in individual industries. It can also be triggered by a deep economic crisis or by inept, unprofessional actions of the government.
Zimbabwe: getting to know the country
Recently, the name of this African state is increasingly appearing in the news feed. The same thing happened at the end of the 2000s, when the country was hit by record-high inflation rates. Zimbabwe and its inhabitants at the end of 2017 experienced another military coup (quite an everyday occurrence for Africa), as a result of which the scandalous president Robert Mugabe was overthrown. In this position he stayed exactly 30 years.
Emmerson Mnangagwa (by the way, one of the former associates of Mugabe) became the new leader of the country. On November 24, 2017, he took office as President of Zimbabwe. It is worth noting that Mnangagwa distanced himself from his predecessor. He dismissed the cabinet and promised in the next 100 days to crack down on corruption. Whether positive changes will begin in Zimbabwe, time will tell.
It's a shame that this African state has considerable mineral and agroclimatic resources. The bowels of Zimbabwe are rich in diamonds and some other minerals. The mild climate and exotic nature have attracted and still attract a huge number of tourists from all over the world.
Zimbabwe is a young state. It appeared on the political map of the world only in 1980. Before that, the country was a colony of Great Britain and was called Southern Rhodesia. During the 80-90s, Zimbabwe was considered one of the most developed and prosperous countries in Africa. What happened then? What events led to 2008 hyperinflation?
Zimbabwe Inflation: A Chronology of Events
Every Zimbabwean in the late 2000s did not even become a millionaire - a sextillionaire! True, the inhabitants of this country had to pay several hundred trillion dollars (not American, of course, but local) for a loaf of ordinary bread. The Zimbabwean national currency in those years fell into the deepest inflationary hole. In July 2008, a beer mug rose in price one and a half times every hour. A typical photo of inflation in Zimbabwe is shown below.
The currency of this country (Zimbabwean dollar) has its history since April 15, 1981. The leadership of the young state presented the first freshly printed bills along with the flag, coat of arms and anthem. These were banknotes of 1, 5, 10 and 20 dollars. At first, the new currency kept afloat. But by 2001, inflation in Zimbabwe had crossed the threshold of 100%.
The incompetent authorities did absolutely nothing to save the crumbling economy of the young African republic. The reserve bank only continued to invent new banknotes of an increasing and greater denomination. By the end of 2008, the inflation rate in Zimbabwe reached record levels - 231 million percent.
The currency was denominated in Zimbabwe three times: in 2006, 2008 and 2009. As a result, on June 30, 2009, the Zimbabwean dollar was completely abolished. Instead, American, Euro, and Chinese Yuan began to walk in the country.
The main causes and consequences of inflation
Why did such inflation take place in Zimbabwe? The answer lies on the surface. At the turn of the millennium, Robert Mugabe and his supporters began a policy of nationalizing land and farming in the country. In fact, the land was taken from the whites and transferred to the local black population.
Descendants of the European colonialists were forced to leave Zimbabwe. However, the indigenous people of the country did not understand anything either in business or in agriculture. Very soon, agricultural production (the pillar of the national economy) was reduced tenfold. Madam inflation did not have to wait long - the usual goods and products began to disappear from the shelves of Zimbabwean stores.
Inflation in the country was further aggravated by severe economic sanctions that were imposed on Zimbabwe in response to repression of the white population.
The consequences of the 2000 crisis for the republic were terrible. Zimbabwe today is one of the poorest countries in Africa and the world with colossal unemployment (up to 80%) and a practically destroyed economy. In order to somehow survive, local residents unite in rural cooperatives, in which there is neither electricity nor modern tools. Therefore, the villagers cultivate the land in the old manner - hoes.
The already difficult situation is significantly complicated by adverse ecology, agricultural land pollution with insecticides, high rates of child mortality and AIDS incidence.
Interesting Facts About Zimbabwean Dollars
Finally, we bring to your attention some more interesting facts about the national currency of Zimbabwe:
- The 100 trillion Zimbabwean dollar bill of 2008 was the largest banknote with so many zeros worldwide and in history.
- Banknotes and coins of the national currency are quite beautiful and original: many of them depict typical animals and plants of the African savannah - elephants, antelopes, rhinos, zebras, baobabs.
- Gideon Gono (Head of the Zimbabwe Reserve Bank in 2000) received the Shnobel Prize in Mathematics.
- Although the Zimbabwean dollar has been abolished, it continues to be used by some residents of the country. True, this is extremely inconvenient, because you have to go to the grocery store with a bulky car.
- Recently, in Zimbabwe, not only euros and yuan, but also Russian rubles are gaining popularity as a settlement currency.
