via CZI seeks to arrest economic decline March 18, 2014 By Victoria Mtomba NewsDay
THE Confederation of Zimbabwe Industries (CZI) was yesterday set to hold an emergency meeting to map ways of containing the retrogression in the economy characterised by widespread company closures and job cuts as the country heads for a deflation.
CZI president Charles Msipa yesterday said they were increasingly getting worried about the state of the economy.
“We are all concerned about the slowdown in the economy, hence the emergency meeting. We want to see how we can address these issues of company closures and job losses. We are having a meeting today (yesterday) on the economy,” he said.
An analyst who declined to be named said the country was heading for deflation, but it was premature to say so as it was in the first month of negative inflation.
“There is need to first of all see the trend, maybe after the March and April figures. But signs are already pointing to deflation as economic activity remains depressed,” the analyst said.
Economist John Robertson said the country should, however, expect a change in fortunes due to the weakening of the South African rand, which is expected to affect the local economy.
“The economy is going backwards and there is nothing being done to fix the problems. The country has low investments because of the indigenisation laws. Investors do not believe in the flexibility of the indigenisation law,” Robertson said.
For the month of February inflation stood at -49% after shedding 0,90 percentage points on the January 2014 rate of 0.41%.
This means that prices as measured by the all-items Consumer Price Index decreased by an average of 0,49 percentage points between February 2013 and February 2014.
This is the first time the country has registered negative inflation since 2009 when the multicurrency was adopted.
Zimbabwe National Chamber of Commerce economist Kipson Gundani said the economy was not yet in deflation, but the economy was going through price adjustments.
Gundani said many goods were highly-priced since 2009.
Deflation is a decrease in the general price level of goods and services.
“Prices are increasing at a slow rate and it’s not all the goods that have reduced prices. We can pick one or two products that have decreased, some prices are still going up,” he said.