We have been through immense economic and social hardships in recent years so it can be reasonable to refuse to get carried away yet.
We went back into hyperinflation over the past few months. Prices were rising daily, even at a faster speed. Quotations in local currency were once again valid for 24 hours, even for fewer hours.
That was because the national currency was rapidly losing its value and those among us who had it easy were those with access to foreign currency. Life was becoming increasingly difficult. Year 2008 appeared to be striking once again.
However, the past three months have given us hope.
The local currency is holding its own on the weekly foreign currency auction market that was introduced in June to make forex more easily and transparently available for qualifying importing companies. This has tamed the forex parallel market on which most importers relied for their hard currency needs. As the local unit holds, prices of various goods and services have stabilised, falling in a few cases.
Also, we reported yesterday, inflation is declining at the back of the currency stability. The Zimbabwe National Statistics Agency reported in its latest report that inflation slowed down to 659, 4 percent last month compared to 761 percent in August. This means that prices as measured by the all items Consumer Price Index increased by an average of 659, 4 percent between September 2019 and last month. Furthermore, month-on-month inflation fell to 3, 83 percent last month, shedding 4, 61 percentage points on the August rate of 8, 44 percent.
As indicated earlier, the Zimbabwe dollar is performing well on the auction. According to the Reserve Bank of Zimbabwe, the unit firmed by a quarter of a Zimbabwean cent to $81, 3458 to the US$ on the latest auction on Tuesday.
Three hundred and eighty-two bids were accepted and total allocations on the day were US$29, 2 million up from US$26, 12 million last week.
Yet another positive signal is the rising demand for the Zimbabwe dollar. As it collapsed against other currencies a few months ago, not many people wanted to deal in the local currency. It was of little value to them. However, it is now returning to favour.
We report elsewhere today that the Government expects the economy to grow by 7, 4 percent next year from minus 4, 5 percent this year. Inflation is seen on the downward trend as the local currency continues to perform on the foreign currency auction.
“In 2021, the economy is predicted to recover from a projected contraction of – 4.5 percent in 2020 to a growth of 7.4 percent, driven by consumption (2.6 percent) and investment (5.8 percent) improvements,” Finance and Economic Development Minister, Professor Mthuli Ncube, said yesterday in his 2021 Pre-Budget Strategy Paper themed: “Building Resilience and Economic Recovery Post Covid-19,”
“The recovery in consumption is mainly anchored on expected stabilisation of inflation through ongoing policy interventions, which should aid restoration of purchasing power of consumers.
Employers including the Government will continue to review wages and salaries in line with inflation developments and budget capacity to restore eroded incomes as the economy recovers.”
The 2020/21 agricultural season is forecast to be successful on the back of normal to above normal rainfall projected by meteorologists. If agriculture does well in our country, the broader economy tends to do well too.
We are confident that the Government has set the economy back in the right direction. This will enable our people to start living their lives again.
As we recognise the encouraging performance of the economy since June, we continue to implore the Government to keep the focus. The private sector is encouraged to keep the focus too. The same applies to the people.
There is a lot more that all significant actors in the economy should do for this positive trajectory that started in June to be sustained.
Nevertheless, if illegal Western sanctions aren’t lifted, the economy’s full potential may not be realised. The US and the European Union (EU) must thus immediately and unconditionally remove their sanctions on Zimbabwe. Sadc has spoken against the illegal embargo; Africa has spoken; the Non-Aligned Movement has spoken; the world has spoken. The US and the EU must take the right decision.