THE economy shrank by 6% in 2007, invalidating predictions made by the government in 2006 that it would grow by between 0,5% and 1%.
gn=justify>In addition, official inflation jumped to 26 470% for November 2007, according to Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono who yesterday attacked government for embargoing inflation figures. Gono however did not disclose the inflation figures for December.
In his Monetary Policy Statement yesterday, Gono revealed that declining production across all sectors had resulted in the economy shrinking.
“The economy is estimated to have declined by about 6% in 2007,” he said. “This contraction in economic activity has been mirrored in output decline in all sectors of the economy with the exception of a marginal increase in agricultural output,” Gono said.
He attributed the declining production to critical shortages of foreign currency and government’s disastrous price blitz implemented last July.
Gono’s revelations directly contradict government forecasts for economic growth in 2007 as he said all other sectors, apart from agriculture, shrank in 2007.
Former Finance minister Herbert Murerwa projected overall economic growth for 2007 at levels ranging between 0,5% and 1%.
Agriculture grew by only 1,4% against estimates made in 2006 that it would grow by 6,4%. Mining, which Murerwa forecast to record growth of 4,9% in 2007, remained depressed on the back of crippling power shortages that saw gold production falling by 37% from 6,98 tonnes to 4,0 tonnes.
The huge variance between estimates made by the government for the 2007 fiscal year and Gono’s statistics have now put to question the forecasts made by incumbent Finance minister Samuel Mumbengegwi in his 2008 budget statement delivered two months ago.
Mumbengegwi forecasted a real economic growth of 4% and said his estimates were based on “anticipated growth in the agricultural sector, improved industrial performance and economic programmes by the grassroots, including SMEs”.
Gono painted a gloomy picture for the manufacturing and mining sectors saying they continued to face a number of problems that included foreign currency constraints and electricity supply interruptions.
He indirectly attacked the Ministry of Finance, which prohibited the Central Statistical Office (CSO) from publicly releasing inflation figures since last September. By then inflation was at 7 892,1%.
“As monetary authorities, we call upon those whose role it is to collect, compute and publish economic statistics to do so timeously so as to preserve credibility of national accounts, as well as enabling proper business planning,” Gono said.
He said the failure to release inflation figures had resulted in distorted guesses by the market.
“Yes, our inflation is the highest in the world, but this should not tempt us to sweep our blemishes under the carpet.”