Question

Discuss the hyperinflation causes and implications in Zimbabwe?

Answer 1

We all know that the condition of Zimbabwe economy is not good. we read out every time in newspaper that the inflation in Zimbabwe increase day by day and also economy disturb. we also know that in Zimbabwe  the monetary unit i.e. its currency value is unstable and this is the indication of Hyperinflation.

Just discuss the Causes of Hyperinflation in Zimbabwe

1.Excessive printing of money caused much of the hyperinflation.Government were printing a lot of money to service their financial needs in the Second Congo War. This was to meet the demand of higher salaries for government officials and the army.

2.Lack of confidence in the government leads to institutional corruption.

3.Poor economic policies by the government cause hyperinflation. The land reforms reduced agricultural output hence affecting economy most notably tobacco farming that represented a third of the country’s foreign exchange. The manufacturing industry declined because of the inexperienced leadership of the black people.

so these are the causes which shows the condition of hyperinflation in Zimbabwe.

Implications:

Zimbabwean government adopted the use of foreign currency. This move aids commerce as trading becomes easier when dealing with stable currencies like the US dollar and the European Euro. This move was slowly bringing back the lost faith in the monetary currency of the country.Printing of the Zimbabwean dollar stopped in 2009. Zimbabweans were then encouraged to use a foreign currency of their liking.