Inflation, Elections, Volatile Exchange Rate Threats To Economy

Runaway inflation, the depreciating Zimbabwe dollar, drought, COVID-19, and the upcoming 2023 harmonised elections present a significant risk to Zimbabwe’s economic growth prospects in 2022 and beyond, analysts and industrialists have said.

The Government had to revise its year-end inflation forecasts several times from the initial 10 per cent to 58 per cent, but inflation still closed the year 2021 at 60.7 per cent.

This has eroded consumers’ disposable incomes and companies’ spending power on investments. Analyst Walter Mandeya of Trigrams Investments said:

Runaway inflation is a more significant risk in 2022 (than the pandemic).

The last two or so waves of the COVID-19 virus have typically had short-term negative effects on growth, a pattern we expect to continue as Government has not imposed tight lockdown measures in the last two (waves).

Inflation will eat into wages and reduce demand. Reserve Bank of Zimbabwe might be forced to raise rates again in an effort to tame inflation.

Our economic outlook stands and falls with the inflation outlook. Should we see runaway inflation as high as this year, then consumers and businesses will not be left with much to deploy into consumption and investments and this could weigh on demand and subsequently derail economic growth.

Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer Christopher Mugaga said frequent droughts will negatively impact agriculture yields. He said:

I think it’s a reality that we are behind a curve when it comes to climate shifts. We continue relying on rain-fed agriculture when times have changed.

Climate unpredictability worldwide has increased the frequency of dry spells, impacting negatively on agriculture yields.

Confederation of Zimbabwe Industries president, Kurai Matsheza, hopes the 2023 general elections will be conducted in a manner that will not disrupt business. Said Matsheza:

As 2022 is a year before the 2023 elections we all hope political temperatures won’t rise to the extent of making the operating environment unsafe for all businesses and individuals.

More: Business Weekly

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2 comments on “Inflation, Elections, Volatile Exchange Rate Threats To Economy

  1. As Steven Hanke said it…”ED is completely ignorant of economics” so CZI should expect the obvious come 2023 elections… violence is ZanuPF’s Manifesto to consolidate the vote rigging/cheating….!

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