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

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Macroeconomics: Inflation Rates in Zimbabwe Under President Robert Mugabes Rule

Hyper 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.
The 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 ...Show more


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,…
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