Sorry for not blogging for so long. I’ve been busy, distracted – last night I broke the lock on my bedroom door whilst trying to get back in and spent the night sleeping in the spare room at the bed and breakfast!
I spent the weekend in Zimbabwe, having met some people at this party I went to on Wednesday night with a whole lot of Zimbabwean farmers. I spent most of my time in Mutare, one of the biggest cities.
There is SO MUCH to tell about Zimbabwe but for you economists out there, Zimbabwe is officially the cheapest country I’ve ever been to. And there’s one good reason – hyperinflation.
Zimbabwe’s official inflation rate is “only” 129% (for the uninitiated, that means that something that costs $1 today will cost $2.29 in one year’s time – the current value in Australia is about 3%). The real inflation rate, from my conversations with small business holders though (who I randomly happened to have lunch with on Sunday?!) is about 600%.
This makes doing business there almost impossible as inflation spirals – unions anticipate that prices will rise by 600+% and ask for 1000% wage rises, pushing prices up even more. And, as inflation increases, the actual value of the dollar decreases. Dramatically.
In 1980, the Zimbabwe dollar was worth MORE than the US dollar. Now, the official exchange rate is 6000 Zimbabwe dollars for 1 US dollar, with the black market rate as high as 20,000 Zimbabwe dollars for 1 US dollar!?
The funny (yet tragic) thing is, all the notes from when the dollar was worth more still exist. For example, while I was over there, we used $50 notes (worth less than one Australian cent!).
Also, they have had to introduce larger notes, such as the $20,000 one – which is still only worth between $1 and $3 US dollars.
If you look closely, you’ll see that this is one of the few currencies on earth that has an expiry date?! And isn't actually a "note" ... it's a "bearer cheque" ...?!
Even once I spent the money, deep inside the aging Zimbabwe supermarkets lay one of my deepest, darkest enemies* …
More to come.
Blessings
John
*for those of you who don’t know, I don’t like kiwifruit, for a variety of medical/emotional reasons
john
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