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AfricaBusiness & FinanceZimbabwe

Zimbabwe economy possessed by a demon, more like Covid-19

By Almot Maqolo

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Zimbabwean economy is affected by a demon like corona-virus which needs contact tracing, an official said on Wednesday. Following the February 2019 unpegging of the exchange rate from the US dollar and the June 2019 introduction of the new currency—the Zimbabwe dollar —the exchange rate has deteriorated from 2.5 Zimbabwe dollars per US dollar in February 2019 to 55 Zimbabwe dollars per US dollar this month.

Reserve Bank of Zimbabwe (RBZ) Governor Mangudya told the Budget and Finance committee chaired by Felix Mhona that Zimbabwe’s economic downturn is being caused by a demon. Mangudya was responding to the question regarding the problems behind the economic meltdown in the southern African nation. “There is a demon, more like coronavirus that is affecting the economy. You can’t touch it but you can feel it,” he said.

“It will need contact tracing just like coronavirus. I will need you as legislators who represent constituencies to assist in tracing it.” The southern African nation economy’s downward spiral has fueled unemployment and poverty. Zimbabwe’s GDP is poised to contract by 7.4% from an initial projection of 0.8% growth in 2020, according to IMF’s Sub-Saharan Africa Regional Outlook. But, the economy is set to rebound to a small growth of 2.5% in 2021.

Also, inflation is projected to end the year at 319% while broad money as a percentage of GDP forecast at 15%. About 2 million people in the rural areas were food insecure in April–June 2019—expected to rise to 5.5 million in January–March 2020—with 2.0 million more affected in urban areas.<br> <br>Zimbabwe is still recovering from the shock of El-Nino induced drought which characterised the 2019/20 cropping season resulting in crop failure, livestock and wildlife deaths. This and among other issues has brought more pressure to the fiscus.


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