The Economist Magazine Remains Confused On Zimbabwe Inflation
Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.
The Economist magazine remains confused. The November 4th issue of The Economist carried reportage on the ever-more acute economic disaster that grips Zimbabwe: “Surviving under Mugabe: Zimbabwe’s Deepening Crisis.” While the broad outlines of this reportage are correct, one reported “fact” in particular is simply wrong — a real howler that any good fact checker should have flagged as an error to be corrected. The Economist writes: “…hyperinflation that peaked at 500,000,000,000%.” Well, that’s a big number. But, it is way off – way too low. The actual peak of Zimbabwe’s hyperinflation episode generated an annual rate of inflation of 89,700,000,000,000,000,000,000%— a figure I and my team at Johns Hopkins estimated, and one that is widely recognized in the scholarly literature on hyperinflation. The Economist error, which they have repeated again and again, is huge: 89.7 sextillion percent is 179 billion times greater than the figure presented as a “fact” by The Economist.
I pointed this out most recently in my Forbes Column of November 14th. In “response,” The Economist had this to say about Zimbabwe’s hyperinflation: “Inflation reached 500 billion percent, according to the IMF, or 89.7 sextillion percent, according to Steve Hanke of Johns Hopkins University. (Measuring hyperinflation is hard.)”
The Economist should receive an “E” for effort, but remains confused and in error; the magazine is comparing apples to oranges. The 500 billion percent figure from the IMF is for the end of September. My 89.7 sextillion percent figure is for the peak, which occurred on November 14th. This November date is a month-and-a-half later than the September date, on which the IMF made its estimate.
The Economist claims that the IMF estimate and mine are comparable numbers. What nonsense — a simple oranges vs. apples problem. Moreover, The Economist’s claim that “measuring hyperinflation is hard,” is unfounded. After suitable study and preparation, measuring hyperinflation accurately is actually rather straightforward. At present, my team at Johns Hopkins calculates Venezuela’s and Zimbabwe’s annual inflation rates each morning.