Countries that have emerged from major economic crises
The world economy is currently going through a severe crisis. However, this one is not as big as the post-war ones, but it also has ruinous consequences: rising unemployment rates, falling GDP, and hyperinflation. These are some of our worries about economic crises.
In any case, even with this unflattering outlook, there is hope. If previously several countries went through crises with high hyperinflation rates and managed to get out of there, we can also do it. Let’s go!
Economic crises origin
The economic crises that resulted from the two world wars in the 20th century is the biggest in history. During this time, there were canceled exports, damaged infrastructure, paralyzed productions, bankrupt countries, and, in addition, big expenditures for the invaded countries. In this way, currencies lost value and the prices of products rose considerably; this situation generated the printing of money in an excessive way. In spite of everything, the involved countries managed to recover their economy.
Economic crises in the 20th century
- Hungary (1946): At the end of World War II, Hungary experienced the highest inflation in history. With a daily rate of 207%, the prices of products doubled every 15 hours. By August 1946, the Hungarian government adopted measures that led to the economic recovery; among them was the change to a new currency (the Hungarian forint) and the recovery of gold reserves abroad which would be the support of this new currency.
- Greece (1944): During the Second World War, the Axis involved in the conflict occupied Greece. They had a daily inflation rate of 18% with prices doubling every 4 days. In October 1944 the country was liberated and for 18 months they implemented measures to overcome the crisis. These decisions included the introduction of a new currency and international loans.
- Germany (1923): when the Great War finished, Germany had to take on big debts and infrastructure repair, so it started buying large amounts of foreign currency to pay debts. All this caused a daily inflation rate of 21% with prices doubling every 3 days. The crisis was so big that protests and strikes paralyzed production. By October 1923, the inflation rate was 29,500% per month, and the government adopted a new currency named the “safe Mark” backed by farmland. Finally, creditors agreed on a restructuring of the foreign debt which led to price stabilization.
- Zimbabwe (2008): Due to European Union sanctions and the intervention in the Congo War in 1998, inflation rose in Zimbabwe. By 2008 the daily inflation rate was 98% and prices were doubling every 25 hours. People decided to cross the borders to buy food as the shops in the country increased their prices several times a day. The US dollar and the South African rand were the currencies used to buy throughout the borders. In 2009 the government decided to stop using the national currency and adopt the American and South African ones.
All these countries went through the biggest economic crises in history. Even so, they were able to overcome them by taking several economic measures. The most common was the change of currency to a foreign one or the adoption of a new currency. It allowed them to pay off their foreign debts and control the price increases in their countries; they stabilized, therefore, their national economies. The case of Hungary is the most extraordinary because it represents the highest inflation rate in history, even so, it was able to emerge from that crisis.
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