Continuing its slide into barbarism, the government of Zimbabwe has just released a $10 million Zimbabwe dollar note, which as this article writes, is still not enough to buy a single hamburger. An inflation rate of 150,000% is almost impossible to comprehend, so to break it down a bit:
150,000% inflation per year / 365 days = 410.96% inflation per day
To put this into perspective, at a daily inflation rate of 410.96%, something that costs, say, $10 today would end up costing $51.10 at the same time tomorrow. Needless to say, this makes life in Zimbabwe pretty tough. The really sad thing is that Zimbabwe was once one of the most developed countries in Africa with decent transport and power infrastructure and a thriving economy based on agriculture, mining and tourism. This of course is due to President Mugabe’s harebrained land redistribution policy in the late 1990s which resulted in the eviction of 4,000 white farmers and a stubborn refusal to face basic facts.
Between 2000 and 2007, Zimbabwe’s economy contracted by 40%, tourist visits fell by 75% in 2000 and the government has given up publishing official inflation figures. Within a period of less than 10 years, Zimbabwe has gone from a big exporter of wheat to having its citizens hunt for rats in fields to eat. President Mugabe continues to insist that the economy’s problems are due to sanctions imposed by Western countries despite the fact that the only sanctions that have been imposed are travel bans against the members of his government. His government insists that the inflation is caused by shopkeepers who keep raising their prices and has introduced price controls, though these are impossible to properly enforce, that effectively obliges shops to sell goods at a loss.
Zimbabwe will make a fantastic case study of how not to run an economy for many decades to come. It’s an incredibly potent reminder of how quickly and how completely a country can be ruined by gross mismanagement.
Addendum (1st March):
Someone has since commented on StumbleUpon that my daily inflation calculation above is incorrect. He is in fact right and that my calculations suck because they do not take into account the compounded effects of daily inflation. In fact, with an annual inflation rate of 150,000%, the daily inflation rate for Zimbabwe should only be around 2.0240155%. I’ve left the original text unchanged as a record of my stupid mistake.
Zimbabwe is in really bad shape at the moment and it is just about impossible to try and keep up with inflation or even the exchange rates. I wonder how things will be after the elections that are set for the end of this month.
I’m sure a lot of people are very curious on what everyday life must be like in Zimbabwe right now. I mean, with inflation so ridiculously high, does everyone just barter goods between themselves? I’ve even read of companies using goods rather than money to pay their employees. I hope for the sake of everyone in Zimbabwe that Mugabe goes down soon because it doesn’t seem like there’s any chance of things getting better over there until someone sane is in charge.
Please learn math. 150,000%/year is not the same 410.96%/day. In just one week of that inflation (410.96%), something which cost 1 dollar would cost $19,800, which would give a weekly inflation greater than the yearly inflation you cite.
Yes, that is an error and I’ve added an addendum to reflect that. It’s odd how this page again got resurrected on StumbleUpon. I suppose it might be because Zimbabwe is in the news again (due to the late release of the poll results), but I wonder how that works.