No Recovery Without Demand, Agribank Chief Tells Zimbabwe

HARARE – Zimbabwe cannot expect its haemorrhaging economy to recover within projected timeframes until demand for goods produced by its industries increases, according to Joseph Mverecha, head of strategy at the State run Agribank.

He says the much-hyped blueprint, Transitional Stabilisation Programme (TSP) has had serious unintended consequences since introduction in 2018, among them a steep fall in consumption, whose effects have been seen through continued firm closures in the past 18 months.

“Collapsing consumption was a consequence of austerity measures,” Mverecha said in a presentation made at the launch of the Confederation of Zimbabwe Industries’ 2019 Manufacturing Sector Survey recently.

“Unless you have recovery in consumption, as a percentage of gross domestic product, you will have negative growth. If you look at the numbers coming out of Delta, demand for beer is going down,” the Agribank chief noted.

Delta Corporation is Zimbabwe’s biggest beverages manufacturer, which is quoted on the Zimbabwe Stock Exchange.

Consumption of its beverages, especially beers and spirits, is usually used as a barometer to measure demand in the economy.

Mverecha said one of the factors driving depressed demand was the re-introduction of the Zimbabwe dollar last year, which has failed to hold traction against major currencies like the United States dollar.

“People are fleeing from our currency,” he said.

“If this continues, growth will be slow. This economy is being driven by inflation expectations. People don’t want to keep their money. We were in a deflation spiral not long ago, now inflation has just shot up,” noted Mverecha.

However, government says TSP has been a success.

The Zimbabwe dollar has depreciated from $2,5;US$1 on introduction in June, to about $25;US$1 on the dominant parallel market.

This week, the central bank projected the rate to stabilise, along with inflation, by the end of this year.

But many experts have predicted that the domestic currency would continue to suffer a drabbing as demand for foreign currency heats up due to high imports including that of the staple maize.

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