February 10, 2011

Zimbabwe Economy

[source: Economy Watch]

Zimbabwe is a landlocked country in Southern Africa. It was previously known as Rhodesia, Southern Rhodesia and Zimbabwe Rhodesia. It shares borders with Zambia, Botswana, South Africa and Mozambique. The topography of the nation is mostly made up of plateaus. Zimbabwe’s economy suffers from poverty, unemployment, hyperinflation and corruption.

Zimbabwe’s economy is a mixed economy with a dominating public sector. Traditionally, the Zimbabwean economic profile used to be one of the strongest in Africa. However, increasing cases of money embezzlement at the administrative level has led to the rise of a severe economic crisis.

In 2004, Zimbabwe’s economy saw negative GDP growth (-13.6%). In the following years, the administration initiated economic reforms to put the growth back on track. However, the 2009 famine was a severe blow to the economic reforms. This, coupled with political instability, resulted in GDP growth of -14.1%. The country’s GDP stands at US$332.1 million, according to the 2009 figures. GDP per capita is US $200.

Zimbabwe's economy also suffers from excessive hyperinflation. The nation has an inflation rate of 14.9%, based on the 2008 estimates. Unrestrained money supply into the market is the primary reason for the hyperinflation in the country. This has devalued the Zimbabwean dollar in the international as well as the domestic markets. In 2007, one US dollar was equal to 30,000 Zimbabwean dollars. Following this, many Zimbabwean organizations started doing business in US dollars, euros or the South African rand.

Zimbabwe is bestowed with abundant mineral reserves, including chromite, asbestos, coal, copper, gold, nickel and platinum. However, the deteriorating political situation has led to poverty, unemployment and large scale migration. To add to this, the Zimbabwean government is not ready to accept foreign aid from western nations. They consider it as a threat to the country's sovereignty.

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