StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Macroeconomics: Inflation Rates in Zimbabwe Under President Robert Mugabes Rule - Term Paper Example

Cite this document
Summary
The history of Zimbabwe dates back to the English Colony of Rhodesia. Zimbabwe is ruled by its President Robert Mugabea. Though the country has been under his rule for the past many years,…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER98.5% of users find it useful
Macroeconomics: Inflation Rates in Zimbabwe Under President Robert Mugabes Rule
Read Text Preview

Extract of sample "Macroeconomics: Inflation Rates in Zimbabwe Under President Robert Mugabes Rule"

Inflation Rates in Zimbabwe Under President Robert Mugabea’s Rule Zimbabwe The Republic of Zimbabwe is a country that is located in the southern partof Africa. The history of Zimbabwe dates back to the English Colony of Rhodesia. Zimbabwe is ruled by its President Robert Mugabea. Though the country has been under his rule for the past many years, Zimbabwe is one of the most mismanaged countries in the world. The problems faced by the country include both economical and human rights abuses. Zimbabwe was also characterized by high rate of unemployment and poverty.

All these factors took the country into a very bad economical and social situation. Inflation in ZimbabweHyper Inflation is the economic situation in Zimbabwe during Mugabea’s rule. It was in early 21st century that Zimbabwe started facing the problem of uncontrollable inflation. Hyperinflation was started reporting with an inflation rate of 623% in 2004. The next record was made when the inflation rate of the country crossed 1000% in the year 2006. IMF said that Zimbabwe has suffered the highest inflation in the world.

By 2007, the inflation rate of the country has crossed the 3000% mark. Inflation rate was continuing in an uncontrollable manner in the country. In May 2007, Zimbabwe reported an inflation rate of above 3700%. The rates were at an upward trend since then. With an inflation rate of 231,150,888.87%, Zimbabwe’s economy surprised the whole world. “By March [2006], inflation had touched 914 percent a year, at which rate prices would rise more than tenfold in 12 months.” (“How bad is inflation in Zimbabwe”, 2006) Inflation rate was not seemed to be stable at a particular rate; instead it was surging year on year.

Reasons for the inflationThe main reason for hyperinflation in Zimbabwe is the poor monetary policy of the government. The growth in the money of the country was not supported by corresponding growth in the output of goods and services. Apart from all these factors the central bank still kept on printing more money, thereby increasing the inflation further. “Zimbabwe’s hyper-Inflation is a result of the monetary authority irresponsibly borrowing money to pay all its expenses and funding quasi-fiscal activities (which are normally left to Central Government).

” (Muponda, 2009) A study shows that it is not the drought or foreign country interruption that destroyed the country’s economy, but misrule by President Mugabea. (Clemens & Moss, 2005) The government was also following a fixed exchange rate policy. Also the government intervention and regulations were higher in Zimbabwe, making it non-conducive for business activity. Reduced business activity due to all these factors reduced the economic activity in the country. (“Zimbabwe an Overview”, n. d.)Consequences of the inflationThe consequences of this hyperinflation in Zimbabwe are the uncontrollable increase in the prices.

The worst situation of the country can be expressed by the fact that a single sheet of toilet paper cost around $417 in Zimbabwe. The cost of living of the country kept on increasing year on year. The cost of postage stamps went up by 600% in a single week in 2007. One copy of ‘The Herald’ is around $10000. The worst case is that Zimbabwe’s Central Bank launched $200000 note. “The new note is worth US$13 at the official exchange rate or $1 on the black market.” (“Zimbabwe launched $200000 note”, 2007) The country faced acute food shortages.

Death rates increased due to inaccessibility to food and medicines. Measures taken to curb the inflationIn fact no material steps were taken by the authorities to control the hyperinflation of the country. Even when the inflation figures started to be reported in million’s percentages, the central bank of Zimbabwe kept on printing more money. One possible solution is to increase the production activity in the country so that the output of goods and services can be increased. But the private sector companies were not at all interested in operating in a market like Zimbabwe.

The government introduced unsustainable plans like making the shopkeepers cut the prices of goods. But, instead of curbing inflation such a solution has lead to food shortages.Thus, Zimbabwe can be said as a clear example for an economy that is killed by mismanagement. Despite being an economic specialist, Mugabea managed the economy of the country in a very pathetic manner. The hyperinflation did not stop it by itself. It further lead to problems like food shortages and violence. Therefore, the future of Zimbabwe’s economy remains a big question in front of the whole world.

Works CitedHow bad is Inflation in Zimbabwe? Retrieved April 25, 2010. From http://psdblog.worldbank.org/psdblog/2006/05/how_bad_is_infl.html Zimbabwe an overview. Retrieved April 25, 2010. From http://www.mbendi.com/land/af/zi/p0005.htm#20 Zimbabwe launches $200000 note. Retrieved April 26, 2010. From http://news.bbc.co.uk/2/hi/business/6924062.stm Gilbert, Muponda. (2009). How Zimbabwe lost control of Inflation. Retrieved from http://www.newzimbabwe.com/pages/inflation180.17386.html

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Macroeconomics: Inflation Rates in Zimbabwe Under President Robert Term Paper”, n.d.)
Macroeconomics: Inflation Rates in Zimbabwe Under President Robert Term Paper. Retrieved from https://studentshare.org/miscellaneous/1565767-macroeconomics-inflation-rates-in-zimbabwe-under-president-robert-mugabes-rule
(Macroeconomics: Inflation Rates in Zimbabwe Under President Robert Term Paper)
Macroeconomics: Inflation Rates in Zimbabwe Under President Robert Term Paper. https://studentshare.org/miscellaneous/1565767-macroeconomics-inflation-rates-in-zimbabwe-under-president-robert-mugabes-rule.
“Macroeconomics: Inflation Rates in Zimbabwe Under President Robert Term Paper”, n.d. https://studentshare.org/miscellaneous/1565767-macroeconomics-inflation-rates-in-zimbabwe-under-president-robert-mugabes-rule.
  • Cited: 0 times

CHECK THESE SAMPLES OF Macroeconomics: Inflation Rates in Zimbabwe Under President Robert Mugabes Rule

Growth rates and inflation rate

This paper aims at discussing the relationship that exists between the growth rates and the inflation rates.... According to robert Mundell theory, a moderate inflation allows savers to increase their amount of savings in order to have adequate funds to finance future activities.... Through the increased saving, money is supply is put under control thus creating an economic equilibrium Conclusion In their efforts to regulate money supply, central banks emulate various microeconomic policies....
3 Pages (750 words) Essay

Communication in Economics

Mugabes land re-distribution policies, endemic corruption, the absence of the rule of law and Zimbabwes involvement in Congos civil war.... In last few decades especially after mid 1990s, the social and political factors resulted in adverse economic conditions for the country. At present the economic conditions of zimbabwe is dealing with high… More than half of the total population of zimbabwe is living below poverty line. In year 2005, the International Monetary Fund warns about the It warned about its rampant inflation, unemployment, high rates of interests and soaring poverty....
4 Pages (1000 words) Essay

Political Strategy Case - Heinz in Zimbabwe

(Alberts, robert C.... The company was initially known under the name Anchor Pickles and Vinegar works while it was run by Heinz and his partner L.... It ran this company under a management contract.... The case kept in mind during the construction of this essay is of the divestment of Heinz from the zimbabwe based… Heinz is a US-based food conglomerate, it has been a familiar name associated with quality food products world wide. The company was founded in the year 1869 in Pennsylvania by Henry John Heinz it began to manufacture and deliver condiments to the local The initial products that the company manufactured and sold were pickles, tomato ketchups and horseradish....
9 Pages (2250 words) Essay

Communication in Economics

This paper explores… Presently, zimbabwe contends with high unemployment rate, shortage of food supply, fuel and poor welfare services.... The economy is also battered by high It is, hence, no surprise that, as of this writing, statistics showed that more than half of the total population of zimbabwe is now living below poverty line.... “According to the Confederation of zimbabwe Industry, some 620 companies have closed shop since July 2000....
4 Pages (1000 words) Essay

Inflows from Zimbabwe to South Africa

The root of the problem which is causing the chaotic state in terms of economic status and sociahumanistic effects in zimbabwe include factors... Some of the most famous hyperinflation cases are illustrated in the table below: The graph below shows a comparative analysis of country with normal inflation, high inflation under normal parameters and hyperinflation.... One of the… zimbabwe is a country located in the borders of South Africa....
2 Pages (500 words) Essay

Zimbabwe Economy and International Relations

In February 2000, the government's draft constitution was rejected by the majority of voters representing the first electoral challenge to the hegemonic and increasingly authoritarian rule of president robert Mugabe and his ruling nationalist Zimbabwe African National Union-Patriotic Front Zanu(PF) party's twenty-year rule (Amanda & Raftopoulos 2003:10).... The aim of the following essay "Zimbabwe Economy and International Relations" is to examine the contemporary state of the economic field in zimbabwe....
6 Pages (1500 words) Essay

Macroeconomics - Inflation, Disinflation and Deflation

inflation, disinflation, and deflation.... hellip; The academic definitions of inflation, disinflation, and deflation will strengthen the reader's understanding before providing the complex details of each of the concepts and applications.... The final section has presented conclusions and recommendations to the economists in terms of how the inflation, disinflation, as well as deflation can be controlled.... The most dangerous economic ailment that is also considered as a potential cause of economic recession is inflation, which is known as the sustained rise in the general level of prices for the goods and services....
7 Pages (1750 words) Term Paper

Ethnicity Conflict in Zimbabwe

The author focuses on ethnicity conflict in zimbabwe and states that the Shonas feels superior in that, the president of the country is from that tribe and thus they treat the others has less equal to them.... The divide-and-rule policies which were highly favored by the colonial masters assured the non-performance of the different ethnic groups.... This protected them from the problem of insurrection thus making it easy for them to rule.... (1998), this same strategy was used by the apartheid regime in South Africa to use the blacks to fight the blacks for their own developments-colonial rule....
8 Pages (2000 words) Term Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us