The article "In dollars they trust" shows economic situations in Zimbabwe after hyperinflation. For example, the OK Mart store in suburb of Harare, owned by OK Zimbabwe, the country's largest retail chain, is doing business well. However, the industrial district farther south of the city centre looks rather less prosperous.
This lopsided economy is a legacy of the collapse of Zimbabwe’s currency. Inflation reached an absurd 231,000,000% in 2008, making American dollar Zimbabwe's main currency. Now the American banknotes the economy relies on have to be begged, borrowed or earned; this helps to keep inflation in the low single digit.
A big question was where the dollars needed to oil Zimbabwe’s banking system would come from. Happily, the dollars came back to Zimbabwe from New York or London. Banking system is still not normal. The risk of a run means depositors flock to the five biggest banks. I think that Zimbabwe needs to create more connections with other governments to help decrease the threats. Zimbabwe has to attract more dollars to fill the trade deficit. Fortunately, consumers are in sunnier mood. They are willingly to borrow even at higher interest rates.
Still, a problem for all retailers is shortage of small change. Yet for all the printing of electronic dollars by the Fed, the greenback is a hard currency in Zimbabwe. In my opinion, Zimbabwe needs more firms which are able to invest so they do not need to borrow too many dollars.
http://www.economist.com/news/finance-and-economics/21576665-grubby-greenbacks-dear-credit-full-shops-and-empty-factories-dollars-they
No comments:
Post a Comment