Hyperinflation in zimbabwe part 1


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  • As inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 pack of gum will cost $1.02 in a year. Most countries' central banks will try to sustain an inflation rate of 2-3%.
  • When associated with depressions, hyperinflation often occurs when there is a large increase in the money supply not supported by gross domestic product (GDP) growth, resulting in an imbalance in the supply and demand for the money. Left unchecked this causes prices to increase, as the currency loses its value.When associated with wars, hyperinflation often occurs when there is a loss of confidence in a currency's ability to maintain its value in the aftermath. Because of this, sellers demand a risk premium to accept the currency, and they do this by raising their prices.
  • 1stnd 2nd pt explanation- This is the second worst inflation in history after Hungary in 1946 .6th point explanation - Loss of wild life leads to deforestation so loss of tourism industry .
  • Hyperinflation in zimbabwe part 1

    1. 1. A project byConnel FernandesVinayak BhosleGaurav SinghVinesh JaiswalAkshay RajputNitesh PrasadRohil SanilHyperinflation in Zimbabwe
    2. 2. WHAT IS INFLATION ? The rate at which the general level ofprices for goods and services is rising,and, subsequently, purchasing power isfalling. Central banks attempt to stopsevere inflation, along with severedeflation, in an attempt to keep theexcessive growth of prices to a minimum.http://www.investopedia.com/terms/i/inflation.asp#ixzz1hjMWR6FE
    3. 3. WHAT IS HYPERINFLATION ? Extremely rapid or out of controlinflation. There is no precise numericaldefinition to hyperinflation. Hyperinflationis a situation where the price increasesare so out of control that the concept ofinflation is meaningless.http://www.investopedia.com/terms/h/hyperinflation.asp#ixzz1hjNCku1P
    4. 4. CAUSES OF HYPERINFLATION INZIMBABWE Land reforms Fragmentation of land Commercial farming to community farming Loss of agricultural productivity Scarcity of food Loss in export revenue Repayment of the IMF Loan Increase of money supply Participation in DRC war Increased scarcity of food and oilwww.cato.org/zimbabwe/hyperinflation
    5. 5. CAUSES OF HYPERINFLATION INZIMBABWE Escalation of cost of production Price control for more than 50% of the products No incentive for production Thus, capital deccumulation Shutdown of industries Loss of confidence Escalation of unemployment Rampant black marketing Prices soar higher Further increased money supplywww.cato.org/zimbabwe/hyperinflation
    6. 6. Thus the above reasons leadZIMBABWE to a dangeroussituation known as
    7. 7. RISE OFINFLATION inZIMBABWE The below chart self explains the rise ofINFLATION rate in ZIMBABWEhttp://www.google.co.in/#sclient=psy-ab&hl=en&source=hp&q=hyperinflation+in+zimbabwe&pbx=1&oq=hyperinflat&aq=2&aqi=g4&aql=&gs_sm=e&gs_upl=0l0l1l248l0l0l0l0l0l0l0l0ll0l0&bav=on.2,or.r_gc.r_pw.r_cp.,cf.osb&fp=344adf6de4d60025&biw=1360&bih=673Year Inflation Issue of note Value ofcorresponding ZIM $2001 112.1 5 Z$ 200002002 198.93 % Z$ 10000000 4USD2003 598.75 % Z$ 100000000 1.20 USD2004 132.75 % Z$100 milliion2005 584.84 % Z$ 250 million 2 USD2006 1281.11 % Z$ 500 million2007 66212.3 % Z$100 billion2008 231150888.87%Z$ 20.50, 100trillion3.75 USD
    8. 8. EFFECTS OFHYPERINFLATIONOnce 1 zw $ = i.59 us $ but latter on in 2008 itcame to500 billion zw $ = 2 us $Prices in Zimbabwe in November 2008 rise inevery 24.7 hoursMajor exporter of tobacco and maze became netimporter.80% of population is unemployedLife expectancy in adult in 1990 – 60 and as ofnow it is 37.60% of Zimbabwes wild life died since 2000FDI is almost nil in Zimbabwe which is the majorindicator in growth of any nation.Prices in Zimbabwe raised to 64 times from 7thth
    9. 9. PRESENT SITUATION INZIMBABAWEAt the time of independence there were about 1%population of whites holding 70 % of countriescommercial capitalIn 1975 there were around 296000 whites whereas in 1999 it was around 120000 and in 2002 thenumber 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 rateof inflationhas reached almost to 0-3% ,but theconsequences of this was that now the street
    10. 10. MEASURES TAKEN TO CONTROLHYPERINFLATION More over in starting 2009 on 16th January govt.planned toIssue notes of greater denomination such as 10T,20T, 50T,and 100T.zw $. Zimbabwe dollar was suspended on 12 April 2009And use of more stable currency was allowed suchas us$,African rand euro . On July 30th 2008 the governor RBZ announcedthat 10Zeros will be removed from Zimbabwean dollar.
    11. 11. BIBLIOGRAPHY http://www.investopedia.com/terms/i/inflation.asp#ixzz1hjMWR6FE www.newzimbabwe.com/pages/inflation180.17386.html regmankiw.blogspot.com/2006/05/hyperinflation-in-zimbabwe.html http://www.google.co.in/#sclient=psy-ab&hl=en&source=hp&q=hyperinflation+in+zimbabwe&pbx=1&oq=hyperinflat&aq=2&aqi=g4&aql=&gs_sm=e&gs_upl=0l0l1l248l0l0l0l0l0l0l0l0ll0l0&bav=on.2,or.r_gc.r_pw.r_cp.,cf.osb&fp=344adf6de4d60025&biw=1360&bih=673 www.hoax-slayer.com/zimbabwe-hyperinflation.html http://www.investopedia.com/terms/h/hyperinflation.asp#ixzz1hjNCku1P http://operatorchan.org/s/res/23689+50.html www.cato.org/zimbabwe/hyperinflation