Buffalo Grove Accountant Comments on the Hyperinflation and the Currency Collapse in Ukraine
Many accountants have made comments on the hyperinflation period that is affecting the Ukrainian economy, but there was one Buffalo Grove accountant that had something to say.
Ukraine is experiencing a 64% hyperinflation rate per month, and it’s expected to reach more than 272% this year. The people living in Ukraine may suffer a currency collapse, and it could have an effect on the global economy.
Real Trouble in Ukraine
The Ukrainian government has accepted responsibility, and they have admitted their inability to handle the situation. The higher authorities are under a great deal of pressure, and they are planning to take certain measures so they can avoid a widespread panic.
According to many local accounting firms and university professors, the situation has gotten worse. The value of the Ukrainian currency has dropped by 70% since the beginning of 2014, and it could be too late to control the decline. In fact, the value of the Ukrainian currency is almost the same as Venezuela, which is the most inflationary place on Earth.
Some of the Major Causes
You don’t have to be an economist to understand the causes of hyperinflation. A basic understanding of economics and current affairs is all you need to understand the magnitude of this crisis. Ukraine is in a bad situation, and it could affect the United States and other parts of the world.
According to a Buffalo Grove accountant, there are some major reasons why this situation has gotten so bad, and why it is now beyond the government’s control:
- Corruption in the Ukrainian government, as well as the war with Pro-Russian secessionist groups has destroyed its ties with industry. This has led to an economic downgrade.
- The Ukrainian government has not been able to collect enough taxes, and the amount collected has been wasted by corrupt politicians.
- A huge money supply and the exchange between commodities among the Ukrainian people has led to the massive increase in the country’s inflation rate.
- Black Market trading has led to the decrease in trading limits of Ukrainian currency and an increased demand for hryvnia currency.
Capital Controlling Measures by the Ukrainian Government
Last week, the government warned Ukrainian banks to stop buying the currency because of its free-fall condition, and this is one of several measures they have taken to control the situation. The collapse has also affected the food industry, and the minimum wage for Ukrainian citizens is $42, which is lower than Ghana, Zambia, and many other countries that have similar economic difficulties.
All the economic factors point toward a high rate of hyperinflation in Ukraine, and it needs to get under control if the government wants to avoid a panic. A report recently came from the IMF, which said that Ukraine’s economy is almost 50% of the country’s GDP, so the country’s ability to control the situation is in question.
Learning More About the Ukraine’s Economic Situation by A Buffalo Grove Accountant
The economy of one country can affect others throughout the world. The situation in Ukraine could have a long-term effect on global commerce, and it could impact the U.S. economy as well. The impact of hyperinflation can be devastating, and it can be difficult to recover from. That’s why the situation in Ukraine is a matter of global concern.
If you want to learn more about the how this situation can affect your financial future, GLG Accounting is available to answer any questions you may have. We are a Buffalo Grove accountant that is trained in all areas of finance, and we can help you be more prepared for what could result in an economic downturn.
Our team can not only inform you of the situation in Ukraine, but we can also help you take the necessary steps to secure your financial future. If another economic crisis were to develop, it’s best to be prepared. That way, you aren’t left in financial ruin.
If you want to speak to a Buffalo Grove accountant about the situation in Ukraine, get in touch with us today!