Zimbabwe’s economic dive continues

Staff Writer | Aug 08, 2019
The Harare government has announced that it is to stop publishing inflation statistics for six months.

The announcement was made by minister of finance Mthuli Ncube as the official inflation rate reached about 200%, and the unofficial rate edged closer to 600%.

The only country on Earth with a higher rate of inflation is Venezuela, where it has reached 35 000%.

Part of the reason for the continuing economic collapse of Zimbabwe is the government’s unilateral decision to reintroduce the Zimbabwean dollar. The country had abandoned its own currency a decade ago, when inflation reached an annual rate of 89.7 sextillion percent (89 followed by 21 zeros). At an inflation rate that high, prices double every day.

According to Zimbabwe-based researcher Derek Matyszak, Zimbabwe has now reached a ‘tipping point’. He estimated that about a quarter of the population had emigrated.

Zimbabwe suffers from regular blackouts, and shortages of basic goods are widespread.

Although the Harare government is looking to relax empowerment laws, the current regime has not significantly changed the policy direction of former president Robert Mugabe.

As a short-term measure, Zimbabwe might once again allow people to use foreign currencies as legal tender. It is thought this measure could be formalised. There have also been proposals for Zimbabwe to join the Common Monetary Area (CMA), whose other members are South Africa, Namibia, Lesotho, and Swaziland. The South African rand is legal tender in all four countries and, while Namibia, Lesotho, and Swaziland have their own currencies, they are pegged at 1:1 to the rand. Zimbabwe’s joining the CMA could go some way to stabilising its economy.

As things stand, however, there seems little prospect of change in Zimbabwe in the short term.

 

If you like what you have just read, become a Friend of the IRR if you aren’t already one by SMSing your name to 32823 or clicking here. Each SMS costs R1.’ Terms & Conditions Apply.

 


comments powered by Disqus