Hyperinflationary Economies Update

With increasing inflation rates and declining economic conditions around the world, more countries have become hyperinflationary in 2024. BDO's IFR Bulletin summarises our views on the application of IAS 29 to jurisdictions as of December 2024.

IAS 29, Financial reporting in hyperinflationary economies applies when an entity’s functional currency is ‘hyperinflationary’. IAS 29 requires the financial statements (including any comparative periods) to be stated in terms of the measuring unit current at the end of the applicable reporting period. This is because the currency of a hyperinflationary economy loses a significant amount of purchasing power from period to period such that presenting financial information based on historical amounts, even if only a few months old, does not provide relevant information to users of financial statement.


During 2024, the list of hyperinflationary economies (and those economies on our watchlist) has continued to evolve due to deteriorating economic conditions and high inflation in several countries. The jurisdictions on the list of hyperinflationary economies must apply IAS 29, which results in financial statements (both current and prior comparative periods) being restated to reflect current inflation rates. 
 

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