via Bank transactions decline – DailyNews Live by John Kachembere 5 MAY 2014
Zimbabwe’s financial transactions have declined significantly as the country slides into full deflation on the back of depressed aggregate demand, a recent report by the Reserve Bank of Zimbabwe (RBZ) indicates.
According to the central bank’s weekly economic highlights, in the first week of April, banking transactions processed through the Real Time Gross Settlement (RTGS) system declined from $1 billion to $887,4 million.
On the other hand, cheque transactions went down 12 percent to $1 921 883,05 from $2 195 554,20 in the previous week.
However, mobile transactions grew by 55,6 percent to $87 905 481,26 from $56 036 715,73 while Automated Teller machines (ATMs) transactions surged 46 percent from $50 791 023 to $73 918 394,44.
Point of Sale transactions also grew significantly by 47 percent from $31 888 207,63 to $46 959 250,25 in the period under review.
The central bank also noted that interest rates for all classes of deposits remained unchanged as the liquidity crunch continues to prevail in the money market.
“At commercial banks, the weighted lending rates for individuals have been on an increase since February 14, 2014, going up from 14,05 percent to 14,25 percent as at April 4, 2014.
“The weighted lending rates for corporate clients also increased to 9,29 percent, during the week under review,” said RBZ.
“The increase in the rates could partly be attributed to the cautious approach to lending by banks as the rate of non-performing loans continues to soar in the money market.”
At merchant banks, however, weighted lending rates remained unchanged at 18,88 percent and 17,73 percent for individual and corporate clients, respectively.
The latest central bank statistics comes at a time the southern African country’s economy is sinking deep into deflation.
Stats recently released by the Zimbabwe Statistics Agency (Zimstats) indicate that the country’s annual rate of inflation for March declined a further 0,42 percent to -0,91 percent, underscoring depressed aggregate demand in a poorly-performing economy.
Inflation rate for February 2014 stood at -0,49 percent, the first time that the country slipped into deflation after months of disinflation and adoption of multiple currencies in 2009.
“This means that prices as measured by the all items Consumer Price Index decreased by an average of 0,91 percentage points between March 2013 and March 2014,” Zimstats showed.
Monthly inflation rate for March slid into deflation, standing at -0,22 percent after dropping 0.27 percent on the February rate of 0,05 percent.
COMMENTS
Mugabe and Zanu PF will have to accept that they cannot rig economic recovery the same way the rigged the elections. The only way the country is going to end the economic decline is for the country to restore confidence in the business community that their investments will be safe from illegal seizure as has become the norm. The only way to restore that confidence is be the country holding free and fair elections and restore regime legitimacy.
The longer Mugabe delays in biting the bullet the worse the economic crisis will get. Mugabe and Zanu PF will be held responsible for the deepening economic and the social unrest that may result.
What Mugabe and Zanu PF have to accept is that the regime’s rule is over, the economic decline will continue as long as the regime remains in office and, ultimately, the economy will take down the regime!
Could someone please eplain why deflation is a bad thing? Surely falling prices help the consumer?
hi, it makes debt more burdensome as debt is accounted nominally and if purchasing power increases the burden of that debt is more. yes prices falling seems good but it is a reflection of a decrease in aggregate demand and a decline like this will surge unemployment higher and cause real wages to decline. in addition to this borrowing is very unattractive in a deflation and with the lack of foreign investment, zimbabwe will likely be in a recession this year. and to top it all off asset prices will fall dramatically which sounds good except there is no credit available to buy them. kind of a paradox that. deflation was what was caused the great depression and the lost decade in Japan. Most central bankers would drop money from planes to avoid a deflation. hope this helps
it was based on a desk research, to suit modern trends of telephone, internet and pos banking. An independent research conducted by someone more independent, using better techniques will bring better results. if anything, these results were predetermined to show “good” performance….ironically the perceived good performance is not that good.
The pleasing aspect of this is that at last the writing is on the wall for the govt – it’s dying a painful death when please will someone pull the plug
Yes the govt is certainly dying a painful death, they realize it but now how to save face and either get out of it or regroup with another helping hand from the gullible opposition.. And more importantly who will succeed and provide the necessary confidence for sustainable growth?
Not Surprised Keep it up!!