Optimism as Zimbabwe Inflation Figures go Down

From The Zimbabwe Standard - by Ndamu Sandu, Saturday, 11 April 2009 15:27

ZIMBABWE’S month-on-month inflation for March decreased by 0.1 percentage points to -3% in March, the Central Statistical Office (CSO) said on Thursday. The development, raised optimism the country is on its way out of the woods.
In February the month-on-month inflation stood at -3.1%.

“This means that prices measured by all the items in the CPI decreased by an average 3.0%,” CSO said.

CSO said the Consumer Price Index for the month ending March 31 had decreased to US$91.73 from US$94.60 in February.

Economists attribute the decline in prices to competition among businesses in order to remain viable.
Since the introduction of forex shops in September and the dollarisation of the economy this year prices of basic commodities have been declining.

Independent economist John Robertson said the inflation numbers are “a modest improvement in that we were too much before though the prices are still high compared to South Africa.”

“We have reason to be pleased but I don’t think it is a full picture of the solution,” he said.

Robertson said it will be a long time before we see local industries producing at their maximum.

Most of the products in shops are imported and there are fears that local industries will collapse if they are not capitalised.

The government has prioritised the recapitalisation of industries under its economic recovery plan, the Short Term Emergency Recovery Programme (STERP).

Under STERP the government said a US$2 billion external credit facility would be established to cater for strategic industries.

Zimbabwe is in a post reconstruction period following years of decline and the country’s begging bowl was extended to Sadc culminating in the regional body approving a US$10 billion bailout package.

Analysts are wary that Zimbabwe will provide the right environment to investors.

To date there are still outstanding issues in the Global Political Agreement that ushered in an inclusive government in March and analysts say would- be investors will watch from a distance until the issues are resolved.