Inflation - Zimbabwe

Hyperinflation on Zimbabwe traces its roots in 1980 after Zimbabwe gained independence. Before independence, the nation was remarkably productive especially in the agricultural sector. The economy was mainly dependent on agriculture as a source of revenue. The economy started to fail after distribution of white farmer's land among the black farmers who had no experience. The hyperinflation period began in 2007; by then its rate was 2600.2%

The government reacted by printing more money, but this reduced monetary value; hence local currency weakened against the dollar. The amount of currency exceeded its demand such that it became impossible to transport large amounts of money in a simpler form such as gold or foreign currency. The government worsened the economy by acquiring foreign plus spending the national GNP uncontrollably.

The hyperinflation had various effects on the nation and its citizens. Approximately 10% of the citizens migrated to the neighboring countries; hence reducing revenue from tax and labor. The government forcefully reduced prices of basic commodities, but this led to shortages for many businesses stopped operating.

Zimbabwe began recovering from inflation in February 2009 when they allowed multicurrency use. US dollars and South Africa rand are the most preferred foreign currencies. By 2010, there were signs of recovery for GNP expanded by 9% from the level of 2009. Since then, inflation has reduced; in October 2011, it was at 4.2%.