Eleven Countries with Soaring Inflation

11. Brazil
> Inflation rate: 6.3%
> GDP growth rate: 1.9%
> Unemployment rate: 5.6%
> Population: 201 million

Brazil is a BRIC nation and the largest economy in South America. Unfortunately, its economy has not grown as fast as the international investment community and its local population may have hoped. Residents have become more vocal about the low quality of public services and corruption, even as the standard of living has improved. Inflation rose from 5.2% a year before to 6.3% in July, and gross domestic product grew less than 2% in the first quarter — much less than the nation’s growth potential. Brazil is hosting the 2016 Summer Olympics, but by the time the games kick off, the international investment community may pay little attention. Brazil’s central bank is now intervening to ease its currency volatility, the Brazilian real, with the promise of buying dollars at a future date. International investment inflows are continuously slowing after the real’s previous appreciation made the nation uncompetitive in global exports. Brazil’s real GDP growth rate of 7.5% in 2010 was among the world’s best, but since then the country’s average growth rate has been closer to 2%.

10. South Africa
> Inflation rate: 6.3%
> GDP growth rate: 2.0%
> Unemployment rate: 25.6%
> Population: 49 million

South Africa is a resource-rich nation that has suffered from continued inflation and labor problems. The country has one of the worst unemployment rates of any major economy in the world, at 25.6%. Gold miners and other workers have been striking for higher pay. Last year, a mining strike resulted in the deaths of dozens of workers at the hands of police. The reality is that as long as there is demand for gold, the nation will have great opportunities ahead. As an example, South Africa’s stock exchange is the 15th largest in the world, according to the CIA World Factbook. The nation’s budget deficit may hamper the central bank’s ability to fight inflation and unemployment while maintaining its growth ambitions.

9. Russia
> Inflation rate: 6.5%
> GDP growth rate: 1.2%
> Unemployment rate: 5.3%
> Population: 143 million

President Vladimir Putin is back in charge of Russia, and the nation is hoping to keep building on its image as an up and coming global economic power player. Russia, one of the BRIC nations, is hosting the upcoming Winter Olympics and owns vast natural resources. However, both foreign investors and Russians have had to deal with a difficult business climate, which is the result of overregulation, corruption, rampant organized crime and competition within oligarch-dominated sectors. Russia’s inflation rate is up from 5.6% a year ago to 6.5% as of June. While the official unemployment rate is low at 5.3%, the latest GDP growth rate of a mere 1.2% mixed with higher prices could mean Russia is at risk of stagflation.

8. Vietnam
> Inflation rate: 7.5%%
> GDP growth rate: 5.0%
> Unemployment rate: 3.6%
> Population: 92 million

Vietnam has been in transformation for more than 25 years now, moving from a nation of central planning to finally joining the World Trade Organization in 2007. It has great opportunities ahead and a very young population. Production of exports has become such a strength for the Vietnamese economy that even Chinese firms are beginning to outsource work there. Exporting goods is the driving force in the nation’s economy — Vietnam has a current account surplus equal to 5% of its GDP — and industrial output is growing while exporting food is on the decline. The CIA World Factbook points out that some 40% of Vietnam’s GDP comes from state-owned enterprises. Loosening government control may bring about foreign investment opportunities. Central bank policies in Vietnam have focused largely on economic stabilization, rather than on growth targets. This brings up the question of how an inflation rate of 5% a year ago is now running at 7.5%, especially when economic growth of 5% as of 2012 is the slowest growth in more than a decade.

7. Pakistan
> Inflation rate: 8.3%
> GDP growth rate: 6.1%
> Unemployment rate: 6.0%
> Population: 193 million

Pakistan’s greatest fiscal problem may simply be that it is still so closely tied to India, a nation with which it has a strained relationship. The nation’s weak government and the fact that so much of the nation effectively lives outside of that government’s control only complicates matters. Pakistan’s reputation and status as a business destination have been damaged by concerns about terrorism and political instability, internally and externally, and its porous borders likely have contributed to its problems. Food prices have been the major source of inflation in the country, yet textiles are the key export opportunity. The inflation rate is high at 8.3%, but down more than a percentage point from a year ago. In roughly the same time, the GDP growth rate has been just over 6%.

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