The stark truth: Economy dead

via The stark truth: Economy dead – The Zimbabwe Independent October 10, 2014

AFTER the recent monetary and fiscal policy review statements, the International Monetary Fund (IMF) visit and Confederation of Zimbabwe (CZI) Manufacturing Sector survey whose report was released this week, and events on the ground which shed more light on what is happening, it is clear the economy is in deep trouble.

It’s now technically in recession.

So instead of wringing our hands and engaging in obfuscation, let’s tell the stark truth: We are submerged in a sea of gloom and doom, as Industry minister Mike Bimha put it on Wednesday. Only those who are economically illiterate think otherwise.

While this is extremely worrying, the real tragedy is that government is completely at sea as to how to resolve the situation.

In his maiden monetary policy statement in August, Reserve Bank governor John Mangudya said the economy is buffeted by tight liquidity conditions, company closures, rising unemployment, low aggregate demand, falling production, non-performing loans and disproportionate trade imbalance, among other problems.

Finance minister Patrick Chinamasa last month in his mid-year fiscal policy review statement delivered bad news of continued economic tailspin and an array of further taxes on already overburdened individuals and companies amid withering criticism from his predecessor who accused him of tinkering with symptoms instead of structurally tackling the deepening recession.

After its visit to Harare last month to assess the state of the economy and the current reform programme, the IMF, while acknowledging government is battling to fix the situation, said things are getting worse.

Growth has slowed down, it said, because of inadequate financial in flows, despite a favourable agricultural season. This and the appreciation of the South African rand, the currency of Zimbabwe’s major trading partner, have caused a liquidity crunch that has further weakened economic activity. The external position remains precarious with low levels of international reserves, a large current account deficit, and external arrears.

It advised government to balance its primary fiscal budget, restore confidence and stability in the financial sector, tackle the debt crisis and clarify the damaging indigenisation policy which has led to capital flight and kept investors at bay.

The CZI report released on Wednesday was even more damning. It said: “Industries in Zimbabwe are under serious threat. De-industrialisation has reached catastrophic levels, with dire consequences to the state of the economy. Arresting de-industrialisation will not be an easy task. Both private and public sectors must take action to address the spectre of economic stagnation or decline.”

The results of the survey show a decline in the sector compared to last year. The collapse in the economy at large has not spared the manufacturing sector.

In 2014, average capacity utilisation continued to drop, shedding 3,3% points to 36,3%. Quite telling is the prolonged effects of power cuts and costs, liquidity challenges, low domestic demand and many other factors.

Now this is the reality. Mugabe and his government must deal with it. They can’t continue kicking dust and ducking responsibility. Of course, everybody knows they have no clue at all, but then it’s their job. They must do something about it urgently.


  • comment-avatar
    Tozvirevakupiko 8 years ago

    You can’t rig the economy!!!!!

    • comment-avatar
      Kusvikazvanaka 8 years ago

      Meanwhile Grace is preOccupied by taking over from the husband to safeguard their loot. Mnangagwa attends the Midlands and Masvingo rallies whereas Mutasa attends the Manicaland rallies. Mai Mujuru is quiet as a mouse. Grace is talking about taking power and not addressing the economic challenges like 96% unemployment, Electric Power Massive shortages, Poor health delivering system…poor remuneration for the few that are employed. Yes You Can Not Rig The Economy!!!!

  • comment-avatar
    SWANIE 8 years ago

    i’m not the one …. it is the British !!!!!!

  • comment-avatar
    tapiwa 8 years ago

    i beg to differ you can ‘rig the economy’ its just a matter of who you are rigging it for.

  • comment-avatar
    protestor 8 years ago

    Economic implosion and self aggrandisement and empoverishment of the masses is the order of the day

  • comment-avatar
    Wilbert Mukori 8 years ago

    So Zimbabwe is now OFFICIAL in recession!

    As long as Mugabe and Zanu PF remain in power this country’s economy will continue to get worse.

    The only thing Zanu PF can do is to step down so the reforms that should have been during the GNU and then free and fair elections helds. This madness cannot go on for much longer!

  • comment-avatar
    James Kwavanhu 8 years ago

    Close the country and declare bankruptcy

  • comment-avatar

    Guys please be advised that those that hold us in ransom are now starting to lose control.This is what we were waiting for. Why now the negativity? All those who know what I mean when I say I WILL BUY YOU A SWEET BANANA will find this making sense. Or else Google it.

  • comment-avatar
    Jono Austin 8 years ago

    ‘Economy dead’- so? Do you think they give a damn

  • comment-avatar
    revenger avenger 8 years ago

    Where there’s bucks there’s muck (zpf)

  • comment-avatar
    Bull-Ant 8 years ago

    Whats is happening is part odof the solution to the problproblems ceeacreated by Zanu.

  • comment-avatar
    Panda moyo 8 years ago

    I dont believe they are clueless.they are advised at every turn by experts,they just dont listen to advice because they would then hav to stop corruption,arrest perpetrators,ignore the chinese put the country first above pollitical power.they are not willing to stop looting.their policy is “let me get rich at any cost and to hell with the rest of the country”

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    harmony 8 years ago

    Zvakanaka zvirikuitika,kana masoja nemapurisa achirikuwana mari zvichiriparinani ndivo vanhu varikukonzera izvozvo,tingadai takaendesa Matibhili kwaZvimba kare.Pamberi nezvirikuitika matsotsi eZPF chibirai final zuva rovira Amen.

  • comment-avatar

    Zpf you built your house on sand, the fall thereof will be great

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    Chaka 8 years ago

    Did you say they must do something? They have tried that since 34 yrs ago, looked west, then east, now at home trying to tax even borehole, but the economy still going down. Waiting to what else they want to try.