SummaryExcessive government interference and mismanagement have affect the economy of the Zimbabwe to be instability and volatility. The country is also in poverty and nearly bankrupt because of the corruption and disastrous economic policies. Hyperinflation for several years also crippled entrepreneurial macroeconomic stability. In year 2008, Zimbabwe had scraped the Zimbabwe dollar because of the inflation that reached 500 billion percent. Besides, the overall tax burden equals to 24.8 percent of the total domestic income. Over the past three years, the government spending has averaged 1.5 percent of GDP. Trade is also important to Zimbabwe as the value of export and import take 75 percent of GDP in Zimbabwe. Gross Domestic Product (GDP) Gross domestic product (GDP) refers to the production of the final goods and services in a certain period of time. Which is gross domestic product. It is a measure of the total product produced by all resident units of a country and often be seen as an important indicator to a country’s economy. It include consumption, investment, government spending and net export but does not include the value of the intermediate investment in the production process. The comparison of GDP among different countries requires the conversion of different currencies. There are mainly two types of conversion: international exchange rates using national currencies or purchasing power parity based on national currencies and a selected standard. Figure 1Figure 1 shows the gross domestic product (GDP) of Zimbabwe from year 1960 to 2015. As we can see, the gross domestic product (GDP) of Zimbabwe in year 1960 was $ 1.3666 trillion and as the economic growth, their gross domestic product (GDP) has reached $ 74.6064 trillion in year 2015. In year 1980, as Zimbabwe independence, the gross domestic product (GDP) increased quickly in a short period of time. In year 1980 and 1981, the gross domestic (GDP) increased over 20 percent, but after that decreased in a while. Between year 1980 and year 1990, the average growth of gross domestic product (GDP) in Zimbabwe was around 4.5 percent. The main reason is when the industry protection policy protect high cost enterprises, export have been decreased due to an increase in the cost of export and foreign exchange has became scarce. Government spending had risen sharply leading to long term fiscal deficits and increase in corporate taxes. The enterprises cannot simply fire a worker as the workers were over protection by law and this caused the enterprises had to pay a huge amount of salaries and it caused many enterprises did not want to hire workers.In year 1990, Zimbabwe start to use a new economy policy in order to achieve long term development including eliminate price controls, reduce administrative controls over investment and employment decisions and reduce fiscal deficits. But the economic condition have not improve due to the competition between the factories had caused many factories go bankrupt. In year 1998, million of dollars was spent on the Congo war and the international community stopped providing help to Zimbabwe. In year 1999,Zimbabwe suffered a serious drought and its economy was further break down and unable to cover it in a short period of time. In the year 2000, Zimbabwe confiscate farms from western and caused the gross domestic product (GDP) decrease because of the production produce by the agriculture had decrease in a lot. After the year 2002 presidential election. United Kingdom, Europe and United State began to impose economic sanctions to Zimbabwe. International organization such as the International Monetary Fund stopped their financial support to Zimbabwe and made Zimbabwe’s economy worse. The issuance of 100 trillion bank notes in 2009 marked the trough of the economy. From 2000 to December 2007, Zimbabwe’s GDP was reduced by 40 percent per capita , agricultural output reduced by 51 percent and industrial output reduced by 47%. After establishing a coalition government in the year 2009, Zimbabwe started to recover the economy situation that had recently collapsed. Zimbabwe disqualified Zimbabwean dollar and started to implement a multi-currency system dominated by the U.S. dollar. With the stability of politic and social, the confidence of investors and enterprises had been rises and the economy has started to resume to grow. The average economic growth rate in year 2010 to year 2012 was above 10 percent. In year 2013, high loan interest rate and the difficulties of introducing foreign investment had made the growth stopped in a while. At the same time, the prices of the export product decreased due to the unfavorable weather, increase in competitive pressure and the uncertainty of the election year had caused the economy growth rate slowed down significantly. The actual growth rate of gross domestic product (GDP) was only 3.4 percent. In the year 2012, Agriculture and animal husbandry accounted for 22.78 percent, manufacturing accounted for 13.65 percent, mining 10.03 percent, tourism 9.91 percent. According to Zimbabwe’s Ministry of Finance statistics, the growth rates of Zimbabwe’s major industries in 2012 were 4.6 percent for agriculture, hunting and fishing, 10.1 percent for mining, 2.3 percent for manufacturing, 0.3 percent for hydro power, 4.9 percent for construction, 5.1 percent for finance, 4.9 percent for real estate, 3.9 percent in tourism and 5.8 percent in communications and communications. Inflation Inflation means that the overall prices level continue to rises. General inflation is a devaluation of the currency or a decrease in the purchasing power where currency devaluation is a reduction in the relative value of the currencies between the two economies.. The former is used to describe the national currency, while the latter is used to describe the added value of the international market. In Zimbabwe, their inflation is known as hyperinflation as there is a condition in which prices increase rapidly as the currency loses it value. Figure 2 Figure 2 shows the inflation rate of Zimbabwe. As we know, Zimbabwe confiscate farms from western and caused the decrease in export product. Since then, the national economy has suffered a recession year after year. Although Mugabe’s re-election in 2013 has stabilized the economy, the difficulties he faces are still to be overlooked. Zimbabwe’s inflation rate had soared to 500 percent in year 2008. It causes the Zimbabwean dollar become useless. Zimbabwe was then converted to U.S. dollar in year 2009 and South Africa Rand as the circulation currency, and after that into euro, British pound, Botswana Pula, Indian rupee and yen so far. At the most serious time for their economy, Zimbabwean have to buy plastic staples with large bag of money. The prices was rises at least twice per day. The maximum denomination issued by the central bank of Zimbabwe in year 2008 was 100 trillion won but it was not enough for the Zimbabweans to board buses for one week. Under the new rule, if the balance in the bank is $ 175000 trillion Zimbabwean dollar,it can convert to $ 5 U.S. dollars. But if the balance is more than $ 175000 trillion Zimbabwean dollar, the exchange rate will be $350000 trillion Zimbabwean dollar to $ 1 U.S dollar. If the money is in cash, the cash that made before year 2008 will use the exchange rate that every $ 250 trillion Zimbabwean dollar to $ 1 U.S dollar while the exchange rate for cash that made after year 2009 is every $ 250 Zimbabwean dollar to $ 1 U.S dollar. Zimbabwe’s central bank has prepared $ 20 million U.S dollar for Zimbabwe’s currency. Unemployment Unemployment is when people wants to work and have the ability to work but cannot find a job. There are 7 types of unemployment. For example, cyclical unemployment, frictional unemployment, structural unemployment, the natural rate of unemployment (NAIRU), seasonal unemployment, hardcore unemployment and hidden unemployment. Figure 3 Figure 3 shows the unemployment rate of Zimbabwe from year 1987 to year 2015. As the economy of Zimbabwe goes worst, the inflation will increase in a lot. As the inflation increase, the worker will ask to increase their salary. When they firm cannot assume the pay anymore, they will fire more worker. As we know at year 1999, Zimbabwe suffered a heavy drought and this caused their extractive industry was in a recession and it caused a huge number of people was unemployed. And in the year 2000, Zimbabwean confiscate farm from western also caused the unemployment rate increased. Due to the unfavorable weather in year 2013, the prise of the export product decrease and because of the competitive pressure and year 2013 was a election year, the unemployment rate increased for the certain time.
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