Patrick Chitumba, Head of the Midlands Bureau
ZIMBABWE’s economy has shown remarkable resilience despite the devastating effects of the Covid-19 pandemic, the Zimbabwe National Chamber of Commerce (ZNCC) said.
With the approval of the International Monetary Fund (IMF) and the World Bank, the country is expected to develop its economy this year, taking advantage of the bumper harvest and resurgence in commodity prices as well as a macroeconomic climate. favorable.
In its recent annual economic overview report released at its virtual annual general meeting which also saw new members take on new positions on Wednesday, the ZNCC said it was optimistic about positive growth as forecast by the ministry. of Finance and Economic Development.
“These favorable numbers follow a very successful crop year, improved power supply, and increased manufacturing and construction.
“However, the significant threat to a sustained economic recovery remains the uncertainty caused by the Covid-19 pandemic and its associated restrictions and the plethora of regulatory instruments developed by the government,” part of the report read.
On the monetary front, the ZNCC said that since peaking at 837.5% (annual) and 35.5% (monthly) in July 2020, official inflation has been on a downward spiral, reaching 362.6% and 5.4%. in January, further decreasing to 161.9% p.a. and 2.5% p.a. in May 2021.
“Food inflation continues to dominate annual non-food inflation. The exchange rate debate, in particular the effectiveness of the currency auction system introduced by the Reserve Bank of Zimbabwe in June 2020, has been a major concern for businesses, ”part of the report read. .
The report also notes that with an initial rate of US $ 1: ZWL 57.35 in June, the auction quickly moved closer to the higher parallel market rate, which largely stabilized at US $ 1: 100. ZWL for most of the second half of 2020.
The auction rate, according to the report, then stabilized around US $ 1: ZWL 82 to date, while the parallel market rate has steadily increased to current levels of around US $ 1: 130 ZWL.
“Indeed, the parallel market premium has steadily increased to return to the same peak levels of June 2020. Multiple exchange rates, and therefore multiple pricing, have continued unabated.
“This scenario is proof of the superficial nature of the auction rate, and companies are calling for the adoption of a market-determined exchange rate. The exchange rate debate rages on, with monetary authorities digging in ZNCC said.
Nevertheless, positive points were recorded on the position of the balance of payments, the hope being that this is not a transitional development induced by the Covid-19.
Zimbabwe’s trade deficit, the ZNCC reported, fell from $ 2.4 billion to $ 131 million between 2018 and 2019, driven by a sharp drop in imports and a slight improvement in export figures.
“In 2020, sectoral export shares included mining (74%), agriculture (18%) and manufacturing (8%), with the main contributors being platinum group minerals (PGMs), gold and tobacco, ”the report reads. “While non-food imports, including energy (fuel and electricity), machinery, raw materials, dominated the import bill, there was a 205% increase in food imports of US $ 194 million in 2019 to 592 million US dollars in 2020 induced by the poor. Agricultural season 2019/20. The bumper harvest of the 2020/21 season is likely to reverse this trend, ”one part of the report reads.