'Doom and gloom' for Zim

Zimbabwe, in its eighth year of recession, has the fastest shrinking economy of a country outside a war zone, according to the World Bank, and the highest inflation rate in the world.

The official statistics agency said on Friday the annual inflation rate hit a record 1 042.9% in April after rising 913.6% in March.

"As expected, it's more doom and gloom..." said private economic consultant John Robertson. Survival mode

"How do you start to explain a situation where you wake up to a new price almost every day? Many families are barely getting by; they are in a survival mode," he said.

Analysts say Mugabe has dented Zimbabwe's investment image with his seizure of white-owned commercial farms for blacks, and that government plans to acquire a 51% stake in all foreign-owned mines will keep external funding at bay.

That has undermined the currency, fuelling an inflationary spiral which shows no sign of abating. Economists say the inflation rate could end the year at around 1 800%.

Some shops no longer put prices on commodities, saving themselves the trouble of changing them every day. With a carton of orange juice costing Z$500 000 (US$5) and a kilo of beef costing up to a million dollars, people carry their money in large bags even for simple shopping trips.

One meal a day

Analysts say most Zimbabweans are just surviving, after cutting down on many basic necessities, with some families living on a single meal a day.

"There is a lot of anger over the economic hardships, and if you combine this with the political conditions, we have an explosive social environment," said Eldred Masunungure, from the political science department at the University of Zimbabwe.

"We are right on the edge, and politically what is going to be interesting is how both the government and the opposition are going to play the game."

"Sabotage"

The main opposition Movement for Democratic Change (MDC) says it is organising peaceful anti-government marches to protest Mugabe's political and economic policies.

Mugabe has warned MDC Leader Morgan Tsvangirai that he would be "dicing with death" if he tried to force him out of power.

Mugabe, 82, in power since independence from Britain in 1980, has used tough security laws to curb protests and says Zimbabwe's economy is a victim of sabotage by opponents of his radical seizures and redistribution of white-owned commercial farms to blacks.

Critics say the economy has suffered over his flagship land reform programme under which output in the key agricultural sector has plunged 60% since 2000, leading to a 35% fall in gross domestic product and a rise in poverty.

Wheeling and dealing

Political and economic analysts say many urban Zimbabweans have so far survived the country's long-running economic crisis through wheeling and dealing and through subsidies from relatives abroad who send money for groceries.

Zimbabwe's inflation is far from being the worst in recent history. Argentina struggled with inflation at around 5 000% a year in the 1980s.

he most notorious hyperinflation was in Germany's Weimar Republic in the 1920s when people had to carry their money in wheelbarrows and the currency had such little value that one US dollar was equal to 80bn marks.

But even without the scale of price rises seen in prewar Germany, inflation at the levels seen in Zimbabwe tends to feed on itself creating a vicious cycle that can spin out of control.