Economy

Eleven Countries with Soaring Inflation

6. Indonesia
> Inflation rate: 8.6%
> GDP growth rate: 5.8%
> Unemployment rate: 5.9%
> Population: 251 million

Indonesia’s woes are very similar to those of India, with its rupiah weakening and its inflationary pressures even worse compared to a year ago. Indonesia actually weathered out the global financial crisis incredibly well. Fitch and Moody’s even raised Indonesia’s credit rating to investment grade in recent years as a result. But this summer there was news of riots after the government mandated fuel price hikes. Inflation already was rising before the summer’s development. Indonesia has decided to tighten its monetary policy as a tool to fight inflation. If growth is being crimped while inflation is rising, Indonesia’s status as “one of the next BRIC nations” may be in jeopardy. A new head for the country’s investment board may help the nation’s business prospects. The nation also has to build better infrastructure to foster growth while somehow keeping a lid on its consumer prices.

5. Turkey
> Inflation rate: 8.9%
> GDP growth rate: 3.0%
> Unemployment rate: 8.8%
> Population: 81 million

Turkey’s big news this summer was its civilian uprising. Turkey actually has experienced serious growth, even as most of the eurozone has suffered from economic contraction. Turkey’s unemployment rate is high at 8.8%, and its 8.9% inflation rate is paired with the latest pre-protest real GDP growth of only 3% — much lower than the country’s real GDP growth rate of close to 9% as recently as 2011. Turkey’s public sector debt to GDP ratio has fallen to about 36% in 2012, which may offer its central bank some extra wiggle room ahead. Turkey’s hopes of joining the European Union may have been damaged even further by international criticism of recent Turkish crackdowns on protests.

4. India
> Inflation rate: 9.6%
> GDP growth rate: 4.8%
> Unemployment rate: 9.9%
> Population: 1.22 billion

India is truly the biggest inflation worry of the world because of its large population. A recent all-time low in the rupee only makes the situation more worrisome. India’s equity market has performed as badly as its currency, and international investors have pulled out of India. India’s new central banking head said in the past decade that too much quantitative easing could create unforeseen problems. The nation’s growth rate has been running well under historical norms at a time when its inflation rate has been too high. Meanwhile, the national infrastructure cannot support the current population, let alone a growing one. India even has tried to restrict the purchase of gold to keep its currency from devaluing, and its dependence on foreign oil means that at least some of its inflation risk is out of its hands. Currently, India’s projected current account deficit is one of the world’s largest, at 4.5% of 2013 GDP. For international investors, India may present an even greater opportunity than China. Unfortunately, that opportunity is on hold.

3. Egypt
> Inflation rate: 10.3%
> GDP growth rate: 2.2%
> Unemployment rate: 13.3%
> Population: 85 million

Egypt is a nation where things have gone from bad to worse, and it may only be the tip of the iceberg. While the Arab Spring has rocked many countries, in Egypt there already have been two regime changes, the recent one a military coup. The ongoing civil unrest and violence had many businesses withdrawing personnel. Tourism has all but vanished, and the country’s ability to import much of its needed goods has been met with lower and lower purchasing power of the Egyptian pound. Egypt’s growth rate was barely 2% as of the first quarter of this year, and that was before the latest round of national violence and bloodshed that dominated the news over the summer. The inflation rate was more than 10%, while the unemployment rate was well into double-digits. Egypt will have to take some serious measures to stabilize its leadership, and then its economy, before the outside world is interested again.

2. Argentina
> Inflation rate: 21.1% (unofficial estimate)
> GDP growth rate: 3.0%
> Unemployment rate: 7.2%
> Population: 43 million

It may be that Argentina’s economy has become too difficult to measure accurately. The government has released dubious official figures, and currency controls are making matters even more questionable. Argentina risks some of the same inflationary woes of the 1980s, and it appears as though official consumer price calculations may not be made public until late in 2013. The government claimed consumer prices rose 0.9% month-over-month in July, while outside sources estimate the inflation rate at more than 2%. Unofficial estimates of the yearly inflation rate cited by the Economist are more than 20%. Nationalizing (stealing) the foreign-owned oil outfit YPF does not exactly help encourage businesses interested in investing in the nation, particularly considering the high local taxes. Import restrictions and currency control restrictions are not helping matters either. Its national statistics put GDP growth rate at 3.0% year-over-year in the first quarter, and the unemployment rate was listed as 7.2% for the second quarter.

1. Venezuela
> Inflation rate: 42.6%
> GDP growth rate: 2.6%
> Unemployment rate: 6.9%
> Population: 28 million

Venezuela is supposed to be living in a post-Chavez economy, yet things are no better than when he was alive. There have been national shortages of toilet paper and other key personal hygiene products. There is even a black market for its paper money, called the bolivar, which likely makes the government’s official numbers even worse than they appear. Venezuela’s oil business is perhaps the only reason the nation remains relevant to the rest of the global economy — some 95% of exports being tied to oil demand. Years and years of saber-rattling against the United States have driven many Westerners’ business ambitions deeper into the ground as well. The inflation rate was already incredibly high in 2012 at close to 20%, but in one year the inflation rate has doubled. Venezuelan leaders should consider bringing in experts to create serious fiscal reform, or the nation will have to prepare for even worse times ahead.

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.