How Is Zimbabwe Surviving

11.2 million % inflation! How is Zimbabwe surviving? Zimbabwe's inflation rate has just touched a stratospheric level of 11.2 million per cent! Yes, 11.2 million per cent, the highest in the world's history! Compare that to the rate of inflation in India -- which is hovering at the 12 per cent level and causing so much turmoil for Indians as the cost of commodities rises sharply -- and perhaps you can put things in proper perspective. And while the world and its brother-in-law shed tears as the United States slips into a recession and major stock markets across the world plummet, spare a thought for Zimbabwe where money has no value, and hunger, poverty and death are constant companions. So why is Zimbabwe facing such times? Read on. . . Why Zimbabwe is in this situation? Zimbabwe is in the throes of an unparalleled economic crisis because of over a decade of economic recession, extreme food and fuel shortage, an unemployment rate of over 80 per cent, and lack of political will to do anything about it. The other reasons also are the government's ban on relief efforts by foreign NGOs, a debilitating drought, and the scourge of the AIDS epidemic. There are more reasons for Zimbabwe's terrifying condition. . . War, mismanagement and excuses The war in the Congo that Zimbabwe was involved in for over 5 years since 1998 too bled its coffers dry, as hundreds of millions of dollars fled from the economy. Economists say that gross mismanagement and corruption in the Zimbabwean government has worsened the situation further. Zimbabwe's ruler President Robert Mugabe, however, puts the blame elsewhere. He says that financial isolation by the world, especially American and European institutions and governments, has led to such a state of affairs When did the problem begin? Soon after the dogs of war were let loose and Zimbabwe took to arms in the war in the Congo in 1998, production levels, investment, education, peace, prosperity, growth. . . everything began to be hit hard. And then in 2001 came President Robert Mugabe's new orders. The Zimbabwean ruler, just a year after he took charge, and began to seize commercial farms owned by whites. This has caused huge shortages of foodstuffs and commodities in the southern African nation So how are Zimbabweans surviving?

Barely. You can just about buy a loaf of bread for Z$1,000. And if you want a few bananas, you need to pay a bagful of cash. The economy faces collapse with consumers resorting to barter as inflation and a slump in the Zimbabwe dollar erodes the value of cash. Cash-strapped people are resorting to bartering fuel coupons for goods, such as household appliances and furniture. Some retailers prefer payment in coupons instead of local currency because of the rapid devaluation of the Zimbabwe dollar, report Zimbabwean newspapers What does this unprecedented level of inflation, or hyperinflation, mean? Well, hyperinflation refers to a condition where prices of commodities rise to extreme levels quickly and the value of the nation's currency declines alarmingly. It is primarily a state of affairs where inflation runs amok and is totally out of control. With the nation's inflation rate the highest in the world, the Zimbabwean government continues to print ever larger denomination notes to keep up What causes hyperinflation? The collapse of Zimbabwe's economy and the government's response of printing more money to pay its debts have led to the highest inflation in the world. The Zimbabwwe dollar is currently trading on the black market at $30 million Zimbabwean for US $1. Among the major causes of hyperinflation is a huge rise in money supply, decline in a flood of the nation's market with money unbridled increase in the money supply or the devaluation of the local currency caused by economic depression, calamity, political or social cataclysms, or war. This, in effect, hits the productivity of a nation leading to a sharp decline in availability of goods and services. It also leads to widespread unemployment A tsunami of unparalleled proportions Even attempts to print more and higher-denomination currency notes does not quell the inflationary tsunami as the pace of rise of inflation is much faster and even the newly minted currency notes quickly lose their value. Hyperinflation leads to hoarding, flight of capital, even exodus of people, a complete halt to new investment, production and jobs. It is a condition from where the economic recovery of a nation is very difficult and could take years to come back on an even keel. Inflation in Zimbabwe In Zimbabwe, inflation was at 625 per cent in early 2004. In March 2007, it jumped to 1,700 per cent . By June 2007, inflation had shot up to 11,000 per cent. In July 2008, inflation skyrocketed to 2.2 million per cent.

And now in September 2008, inflation has reached uncharted area at 11.2 million per cent!

A $10 trillion note! The Zimbabwean central bank cut 10 zeroes off its currency last month, revaluing the $10 trillion note to $1,00 Zimbabwe dollars, in a bid to ease widespread cash shortages as the country battles the world's highest inflation rate. The bank has introduced a series of new notes since August, after the central bank struck 10 zeros off the local currency. Zimbabwe's currency is trading around Zimbabwe $350 -- $35 trillion in the old value -- against the US dollar. But this new Z$1,000 note can only buy a loaf of bread