News Of Economy

Stock exchange surges in Inflation-affected Zimbabwean economy

April 11, 2012

Inflation cursed Zimbabwean economy expected to shatter within six months with the growing failure of Mugabe’s Government, but surging Zimbabwe Stock Exchange share prices trebling in real terms in just 22 weeks, stunned everyone. Economists are in a fix and searching economic quandary, how shattered economy can manage the faith of investors as experts didn’t find the answer to explain the 4,500 per cent surge in the ZSE Industrials index since December 2006. But some analysts assume three possible influences for latest unexpected development • The market is drowning in liquidity as the central bank prints money at a breakneck pace. • The Zimbabwe dollar has collapsed in the parallel (unofficial) market from Z$2,900 to the US dollar at the start of the year to between Z$75,000 to Z$100,000. • The ZSE is more casino than market as investors throw increasingly worthless Zimbabwe dollars into penny stocks. Zimbabwean economy proved notorious after government’s decision to snatch land from the white farmer and distribute it among the indigenous inhabitants. In the latest addition of oppressive Mugabe government ruling, seize majority shares in all of Zimbabwe’s foreign-owned businesses and mines and also divide it to the native compatriot. All these oppressive decision proved to be anti economy move and resulted to degrade the economy. Since the introduction of anti-economy policy inflation is mounting continuously. One month before it was on record 3,700 percent and an unofficial report asserts that consumer prices rose 55 per cent last month and led inflation to 4,350 per cent mark. World Bank has predicted that Zimbabwean inflation rate will cross 6,000 marks in the end of the year. The report also indicates that the cost of living for an average urban family had risen by 66 per cent last month. Amid the hyperinflation, government is pumping thousands of billions of Zimbabwe dollars into the economy in the form of subsidies to gold miners, tobacco and maize farmers and to service the national debt along with higher wages for public servants and the security forces, money supply is growing at an alarming rate. Meanwhile, income is shrinking and entrepreneur and farmer are adopting unfair means to get money out of dilapidated economy. Foreign invertors are leaving the country on the wake of shrinking profit and government oppressive move as country is due to implement, the Indigenization and Empowerment Bill by September. The US and other nations have already dumped their aid and raping up their business from country. Ongoing crises has left Zimbabwean currency is on the verge of inundating in the inflation flow. Image: willisms Via: Financial Times

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