Economy demonstrates remarkable resilience — ZNCC
ZIMBABWE’S economy has demonstrated remarkable resilience despite the ravaging effects of the Covid-19 pandemic, the Zimbabwe National Chamber of Commerce (ZNCC) has said.
With the endorsement from the International Monetary Fund (IMF) and the World Bank, the country is estimated to grow its economy this year, riding on the bumper harvest and resurgence in commodity prices as well as supportive macro-economic climate.
In its recent annual economic overview report released during its virtual annual general meeting which also saw new members assuming new posts on Wednesday, ZNCC said it was optimistic of positive growth as forecasted by the Ministry of Finance and Economic Development.
“These favourable figures come on the back of a highly successful agricultural season, improvement in power supply and increase in manufacturing and construction.
“However, the significant threat to sustained economic recovery remains the uncertainty caused by Covid-19 pandemic and its associated restrictions and the plethora of statutory instruments churned out by the Government,” reads part of the report.
On the monetary front, ZNCC said that since its peak of 837,5 percent (annual) and 35,5 percent (monthly) in July 2020, official inflation has been on a downward spiral, reaching 362,6 percent and 5,4 percent by January, further declining to 161,9 percent annual and 2,5 percent monthly in May 2021.
“Food inflation continues to dominate non-food annual inflation. Of major concern to business has been the exchange rate debate, particularly the effectiveness of the foreign currency auction system introduced by the Reserve Bank of Zimbabwe in June 2020,” reads part of the report.
The report also notes that with an initial rate of US$1:ZWL57,35 in June, the auction quickly approached the higher parallel market rate, which largely stabilised at US$1: ZWL100 for the greater part of the second half of 2020.
The auction-rate, the report said, then stabilised around US$1: ZWL82 to date, while the parallel market rate steadily increased to the current levels of around US$1: ZWL130.
“In effect, the parallel market premium has been steadily rising back to the same peak levels of June 2020. Multiple exchange rates, and hence multiple pricing, has continued unabated.
“This scenario is evidence of the superficial nature of the auction rate, and business has been calling for the adoption of a market-determined exchange rate. The exchange rate debate rages on, with the monetary authorities digging in,” said ZNCC.
Nevertheless, positives have been registered on the balance of payments position, the hope being that it is not a Covid-19 induced transitory development.
Zimbabwe’s trade deficit, ZNCC said, declined from US$2.4 billion to US$131 million between 2018 and 2019, induced by a marked decline in imports and a slight improvement in export figures.
“In 2020, sectoral export shares comprised mining (74 percent), agriculture (18 percent) and manufacturing (8 percent), the major contributors being platinum-group minerals (PGMs), gold and tobacco,” reads the report. “While non-food imports, notably energy (fuel and electricity), machinery, crude materials, dominated the import bill, there was a 205 percent increase in food imports from US$194 million in 2019 to US$592 million in 2020 induced by the poor 2019/20 agricultural season. The 2020/21 season bumper harvest is likely to reverse this trend,” reads part of the report.-chronicle.cl.zw
