No hope for recovery next year: analysts

Shame Makoshori



ECONOMIC analysts this week warned that Zimbabwe, battling an unprecedented economic crisis in its 26-year history, had gloomy prospects for economic rec

overy next year despite government assurances of a surprise turn-around.


Inflation, they said, was likely to climb higher, beating conservative forecasts made by Finance minister Herbert Murerwa in his 2007 budget proposals earlier this month.


Inflation, described by both government and the central bank as the country’s worst enemy, is currently at 1 098% year-on-year after topping 1 200% in August.


Economists said with no prospects for foreign direct investment inflows, there was little prospect of an economic miracle and unemployment, which has soared to record highs, would continue to increase in the coming year.


Independent economist John Robertson said 2007 was unlikely to present any hope to the long-suffering poor in the country as the economic crisis was likely to accelerate.


“The increase in the rate of inflation will have serious effects on the lives of the poor because they will continue to lose their jobs and income,” Robertson said.


“There will be no prospects for foreign investment inflows because of government’s stringent policies. Investors are the only people who can create employment but they are unlikely to invest in an environment where government controls prices or where government wants to take up 51% of mines. This will be bad news for the unemployed,” Robertson said.


In the budget statement presented two weeks ago, Murerwa introduced a $24,2 billion Social Protection Fund to cushion restive citizens from the effects of escalating costs caused by high inflation.


Independent analysts estimate that over 60% of the country’s population live below the poverty datum line.


They said Murerwa’s allocation to the fund was too little for people already surviving on handouts from the donor community.


“A detailed analysis of the figure shows it is grossly inadequate, considering that at least 60% of Zimbabweans are living in poverty,” said Isaac Kwesu, a lecturer in the Graduate School of Management at the University of Zimbabwe.


“The $24,2 billion translates to about $3 361 per person per annum for each of the Zimbabweans living under the poverty line,” he said.


The Central Statistical Office, which compiles inflation information, said the Total Consumption Poverty Line in remote provinces was now hovering between $193 172 and $298 425, from about $175 000 in October.


The cost of key commodities had been shooting up daily in the past two months.


Analysts predicted the trend to continue into 2007.


The cost of a 500 ml pint of milk, which cost $550 last month, now costs between $600 to $1 000, while the price of a 2kg packet of fine salt increased from $300 last month to $1 000. A 750 ml bottle of cooking oil now costs $2 600, from about $800.


The price of bread, whose quality has drastically deteriorated, went up this week to $720 a loaf, from $295.