When Zimbabwe gained independence in 1980, the abolition of the Rhodesian system of apartheid awakened hopes for political transformation. Zimbabwe’s economy continued to perform well in the first decade after independence, and Zimbabwe remained the breadbasket of southern Africa.
Over the past decades, Zimbabwe's economy began experiencing a decline in the 1990s that has been sharply accelerating to date. Economic freedom has shrunk further during this period. Driven lower by significant decreases in scores for monetary freedom and trade freedom. The rule of law, regulatory efficiency, and open markets are weak, and the trade regime has worsened. More than four years after the ousting of the southern African nation’s former leader Robert Mugabe, who oversaw plunging economic output and hyperinflation, Zimbabwe is still struggling to get back on track.
However, over the past decade, Zimbabwe has been experiencing an economic decline that has resulted in an inflation rate of 231 million per cent and an unemployment rate of over 90 per cent. Zimbabwe’s annual consumer price inflation jumped to 131.7% in May of 2022, from 96.4% in the prior month. It is the highest inflation rate since last May, as the currency plunged after the Reserve Bank of Zimbabwe introduced a new interbank rate at 276 per dollar on May 9th. Food prices increased more than 150% from a year earlier. The Zimbabwe dollar was officially trading at 166 per USD and as much as 420 on the black market before the interbank rate was adopted. On a monthly basis, consumer prices surged 21 per cent, the most since July 2020 and following a 15.5 per cent rise in April.
A foreign currency shortage has left local companies battling to buy supplies from overseas to produce goods in Zimbabwe. The war in Ukraine has cut off a key supplier of wheat to Zimbabwe and also reduced supplies of farm chemicals for local crops.
Rising prices revive memories of hyperinflation seen more than a decade ago when inflation spiralled so far out of control that the central bank in 2008 issued a 100-trillion-dollar note, which has now become a collectors' item.