(NEWZIMBABWE) Economy: fresh capital needed, urgently
13/01/2014 00:00:00
by The Source
COMMENT - This is the price of low inflation before anything else. - MrK
THE country is sliding into deflation due to shrinking economic activity and urgently needs fresh foreign capital to stimulate growth, a senior banking official told Parliamentarians on Monday.
Inflation is expected to end the year at 1.5 percent but the rate is seen much lower after it fell to 0.54 percent in November against projections of five percent this year due to falling economic activity and tight liquidity which has seen industrial capacity utilisation drop to just over a third from 55 percent a year ago.
“We face quite some prolonged depression going forward in the economy and it can deepen,” Agribank director, Joseph Mverecha told Members of Parliament attending a post-budget seminar at a Harare hotel.
Over the past year, month on month inflation averaged zero and slipped into the negative in the last five months, he said.
“If you extrapolate going forward by February or March at the latest, the year on year inflation should be negative,” he said, adding that it would then be difficult for the country to come out of deflation, citing Japan which has been in depression for over 15 years despite advantages such as trade and current account surpluses which Zimbabwe does not have.
Mverecha said the country needed to deal with its external debt overhang to enable it to access fresh international capital.
“The first step we need to take is to address key challenges against the background of sanctions. We need a lot of fresh capital,” he said.
“We need to make a commitment to address the core structural challenges and not to deal with symptoms.”
Labels: DEFLATION, INFLATION
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Cost of living drops 8.8 p.c.
Mon, 19 Oct 2009 10:20:00 +0000
MONTHLY inflation returned to negative figures last month, with the cost of living falling 0,5 percent, the Central Statistical Office reported yesterday, bringing the total drop in living costs to 8,8 percent for the first nine months of this year.
This corresponds to an annualised inflation rate of about -11,9 percent. Zimbabwe’s cost of living fell every month between January and May, or putting it another way monthly inflation was negative for those first five months.
There were small rises in the cost of living in June, July and August, with monthly inflation peaking at 1 percent in July, before falling in August and then the return to negative monthly inflation last month.
Falls in the price of food and non-alcoholic beverages led the decline last month, with these items dropping in price by an average of 1,2 percent thanks to seasonal falls in the prices of meat, of 1,3 percent, and vegetables, a whopping fall of 5,6 percent.
Food prices have been falling as more Zimbabwean manufacturers increase production of basic and intermediate foods, substituting for imported foods which are generally rising in price as the rand gains against the US dollar.
In January, most food on supermarket shelves was imported; now most non-luxury items are locally made and specialist Zimbabwean producers are making inroads into the luxury end of the market.
Transport, with costs falling 2,3 percent, communication (-0,9 percent) and clothing and footwear (-0,6 percent) also showed above average falls in prices while
Recreation and Culture (+4,0 percent) and restaurants and hotels (+3,0 percent) led the sectors that showed price rises.
Clothing, housing costs, furniture and alcohol and tobacco all fell slightly in cost, but by less than the average 0,5 percent, while health (+0,1 percent) and education (+0.6 percent) were the other two sectors that showed rises in costs.
The month on month rate of inflation stood at +0.4 percent in August 2009.
Labels: DEFLATION, INFLATION, ZIMBABWE
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Zimbabwe's prices continue to fall
AFP/TZG
Mon, 01 Jun 2009 10:35:00 +0000
ZIMBABWE recorded a minus 1.1 percent inflation rate in April, a slower fall than March, the national statistical agency said on Saturday.
"The month-on-month inflation rate in April 2009 was minus 1.1 percent, gaining 1.9 percentage points on the March 2009 rate of minus 3.0 percent," the Central Statistical Office (CSO) said in a statement.
It said prices of food and non alcoholic beverages for April had also fallen at a slower rate in April, at minus 2.91 percent against minus 5.63 percent in March.
Zimbabwe's government began to release inflation figures in February after the country switched to using multiple currencies when hyperinflation -- which reached at least 231 million percent in July last year -- rendered the local dollar unusable.
Prices of all goods and services are in US dollars or the South African rand, which were adopted by government as reference currencies.
The country's three main political rivals formed an inclusive Government in February to tackle the chronic economic crisis and political tensions.
The government is battling to raise 8.3 billion dollars to stabilise the economy of the once prosperous southern African nation.
The International Monetary Fund (IMF) has started to provide technical assistance to Zimbabwe, which narrowly survived expulsion from the fund and owes the Washington-based body 130 million US dollars.
AFP/TZG
Labels: DEFLATION
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Kwacha appreciates by 10%
Written by Joan Chirwa
Saturday, May 09, 2009 4:11:44 PM
THE local currency on Thursday recorded a significant appreciation of 10 per cent to trade at K5,100 from the week's opening levels of between K5,600 and K5,700. The kwacha's appreciation of 10 per cent within a week has not been achieved in the past two to three years, according to experts.
"This appreciation is on the back of the International Monetary Fund (IMF) loan to Zambia to boost the country’s foreign exchange reserves," said Miles Sampa, a financial markets expert and former president of the Financial Markets Association of Zambia.
"We saw evidence of offshore investors bringing the money back, looking to invest in government securities. There was indication that some inflow came in. Even people holding foreign exchange in accounts started to convert into kwacha."
Sampa indicated that the next psychological level to look out for was whether the kwacha would break the K5,000 mark.
The IMF has since disbursed US $160 million out of the approved a US $250 million loan to Zambia to boost the country's foreign exchange reserves.
And Citibank Group economist David Cowan's analysis of the sub-Saharan Africa currency stability which looked at Zambia's kwacha, Tanzania and Uganda's shilling and the Ghanaian cedi, indicated that the kwacha would find a new equilibrium level of ZMK5,250 against the US dollar despite the recovery in copper prices seen in the first quarter of this year.
"The Zambian kwacha appreciation will not be significant," Cowan stated. "There has been a sharp weakening in many sub-Saharan Africa (SSA) currencies in fourth quarter of 2008 and first quarter of 2009. Notably the Ghanaian cedi, the Tanzanian and Ugandan shillings and the Zambian kwacha have all fallen to historical lows against the US dollar. This currency adjustment has come after a period of stability and has to some extent created a crisis of confidence in the economic outlook for SSA."
Cowan stated that chances of further withdraw of portfolio investments from Zambia and other countries in the region seem limited.
"We expect that all four currencies will stabilise against the US dollar in second quarter of 2009. However, we think that stabilisation will depend to a considerable extent on the speed with which domestic demand for foreign currency wanes, which in turn will depend on the policy responses of the central banks going forward," stated Cowan.
"Of the four economies [Uganda, Tanzania, Ghana and Zambia], the Zambian current account outlook is the most dependent on the price of one commodity, in this case copper, and the rebound in copper prices in first quarter of 2009 means that the deficit could prove to be much smaller in 2009 than the IMF is currently forecasting. Put another way, the recovery in the copper price may not boost the kwacha, but may place a floor under further falls."
Labels: CURRENCY, DEBT, DEFLATION, IMF, KWACHA, MILES SAMPA
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