Highlights

  • Zimbabwe issued a one hundred trillion dollar currency bill in 2009
  • Government printing money in response to high national debt

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Shocking Inflation: This country went from breadbasket to beggar

Zimbabwe, once considered the breadbasket of Africa, was reduced to the continent’s beggar within a few years; its citizens were pushed into poverty and often forced to emigrate.

Zimbabwe's inflation has started to rise again, with year-on-year inflation at 96 percent in April, up from 61 percent at the beginning of the year, mainly due to a rapidly weakening local currency. In a latest move, Zimbabwe froze bank lending in a temporary measure that is meant to contain inflation and stabilise its economy.

Zimbabwe issued a one hundred trillion dollars—100,000,000,000,000— currency bill in 2009 which is the largest denomination of currency ever issued.

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Shocking inflation

In 2008, Zimbabwe had the second-highest incidence of hyperinflation on record. The estimated inflation rate for Nov 2008 was 79,600,000,000 percent. That is effectively a daily inflation rate of 98 percent. Roughly every day, prices would double. It was also a time of real hardship and poverty, with an unemployment rate of close to 80 percent and a virtual breakdown in normal economic activity.

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The History

When Zimbabwe attained independence in 1980, Z$2, Z$5, Z$10 and Z$20 denominations circulated, replaced three decades later by bills in the thousands and ultimately in the millions and trillions as the government sought to prop up a weakening economy amid spiraling inflation.

Shortly after the Z$100 trillion note began circulating, the Zimbabwean dollar was officially abandoned in favor of foreign currencies. From 2007 to 2008, the local legal tender lost more than 99.9 percent of its value. This marked a reversal of fortune from independence, when the value of one Zimbabwe dollar equaled US$1.54. Zimbabwe’s extreme and uncontrollable inflation made it the first—and so far only—country in the 21st century to experience a hyperinflationary episode.

Zimbabwe, once considered the breadbasket of Africa, was reduced to the continent’s beggar within a few years; its citizens were pushed into poverty and often forced to emigrate.

What is hyperinflation?

Hyperinflation is defined as beginning when monthly inflation rates initially exceed 50 percent. It ends in the month before the rate declines below 50 percent, where it must remain for at least a year. Zimbabwe entered the hyperinflationary era in March 2007; the period ended when the nation abandoned its currency in 2009.

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Causes of hyperinflation in Zimbabwe

  • Government printing money in response to:High national debt
  • Decline in economic output
  • Decline in export earnings
  • Price controls that exacerbate shortages
  • Lack of confidence in government, economy and political life

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