The Impact of Zimbabwe's Price Hyperinflation on Reported Levels of National Manufacturing Sector Activity

Abstract

Zimbabwe experienced price hyperinflation as internationally defined in the period March 2007 to January 2009. This paper addresses the issue of how this hyperinflation interacted with manufactur- ing sector performance. Interviews with a small anonymous sample of ‘survivor’ manufacturers suggest that rational decisions as responses to the internal/external structural events from 2000 induced a number of actions that tended to economize on the use of Zimbabwean dollars as the highly monetized manufacturing sector was especially exposed to monetary risks, but was also well connected with the international economy and using other currencies. Though damage to the manufacturing sector continued during the hyperinflation period it did not accelerate as might have been expected. Therefore, analytically, rational decision-making by private sector manufacturers prior to the hyperinflation may have helped protect some of them from its effects but also played a role as acause of the hyperinflation.