Instructive IMF growth forecasts | The Sunday Mail

The Sunday Mail

Victoria Ruzvidzo

Last week’s revision of global growth forecasts by the International Monetary Fund (IMF) to a possible 3.6% from 4.4% is instructive.

While the Brenton Woods institution is generally considered conservative, the scenario playing out on the world stage points to moderate economic growth this year.

The dispute between Russia and Ukraine has long transcended borders and is being felt directly on the dining table.

The supply of most goods has been disrupted, creating shortages which have caused prices to rise as the laws of supply and demand come into play.

Already, we have seen the prices of fertilizers, wheat, gasoline and more rise significantly as newsprint and other supplies become scarce.

Russia and Ukraine play a strategic role in world commodity markets. We might as well prepare for more difficult times ahead, unless we get up and do something about it.

Of course, it may not be in our power as Zimbabwe to stop the war, but we can mitigate its effects as best we can.

At home, the economy is facing inflationary pressures that have caused increases in the cost of goods and services.

Gymnastics on the foreign exchange front does not help matters either. These factors plague the economy as a whole and require urgent redress.

Zimbabwe has made progress in controlling inflation, but the pressures of recent months are threatening progress.

In his address at the Zanu PF Central Committee meeting in Harare on Friday, President Mnangagwa expressed concern over the relentless price hikes, warning that the long arm of the law would catch up with those causing price instability. . This is not the first time that he has warned those who fuel inflation.

“As party leaders, let us continue to be disciplined and upright in all of our business dealings. I also call on our business people to refrain from profiteering as this goes against the mantra ‘nyika inovakwa nekutongwa nevene vayo’. Let us all be responsible citizens who are opposed to the profit and suffering of our people,” he said.

The Reserve Bank of Zimbabwe remains optimistic the economy will achieve the expected 5.5% growth this year, despite the current challenges.

“Despite the lack of external credit and foreign direct investment (FDI) as well as the devastating effects of Covid-19, most sectors of the economy have shown great resilience reflecting the importance of the national financial sector. “, said the Deputy Director of the Bank. economic research division Dr Nebson Mupunga at the Inaugural Symposium on Corporate Governance of the Institute of Corporate Directors of Zimbabwe in Harare on Thursday.

But Zimbabwe’s industry body, the Confederation of Zimbabwe Industries (CZI), says the economy can only progress if the exchange rate aspects are urgently addressed.

In an article published Friday, CZI painted a grim picture for the economy, calling for urgent repairs.

We appreciate some of the concerns raised, although they seemed exaggerated.

The industry representative body said it recommended stabilizing the Zimbabwean dollar as part of a multi-currency basket instead of having the Zimdollar as the single currency.

“It is important that a balanced approach is taken to bring the local currency back from the brink of rejection it currently faces in the face of exchange rate instability and rising inflation,” CZI recommends.

Other analysts also believe that the strengthening of the national currency is essential. Many wondered why the local currency was so badly beaten in the parallel market, when the fundamentals on the ground should normally influence stability.

Prominent economist Eddie Cross said over the weekend that the economy has a foreign exchange surplus and six-month import cover, conditions that favor Zimdollar stability, but that is not the case on the ground.

All of this, in our view, underscores the need for an urgent confluence of minds between government, business and other stakeholders to tame the parallel market while stopping the seemingly growing errant behavior of some players in the economy that is aggravating an already precarious situation emanating from the Russia-Ukraine challenge. CZI, however, said it was committed to working with the government to find lasting solutions. However, they need to do some introspection because some of their members are the key players in the parallel market.

“Over the past 12 months, the government has made significant progress in inflation management and price stability since the peak period of July 2020, when annual inflation reached 838%. The government has also made commendable progress in infrastructure investment over the past 12 months, with notable funding for dam construction and road infrastructure.

“However, inflationary pressures and monetary instability persisted at the expense of economic progress,” he said in a statement.

The need for a meeting of minds to find lasting solutions can never be overstated in this regard. Stakeholders must play their part in ensuring that all undesirables are dealt with decisively while strategies are collectively adopted to sustain results.

Indeed, no one can blame the government, but the sincerity of its partners is essential. Of course, the government can do more to create a more conducive environment and it relies heavily on the very support of businesses, workers and other stakeholders.

Moreover, the need for food self-sufficiency is now even more critical than before given the global supply challenges that have emerged in recent weeks. As this push gains momentum under the Second Republic, it must now be realized at the earliest.

In his state of agriculture paper, the permanent secretary of the Department of Agriculture, Dr John Bhasera, said the government was keen on food self-sufficiency, with import substitution being one of the main objectives. .

“All sub-sector master plans were aligned with the aspirations underlying the first five-year National Development Strategy (NDS1) and designed to engender the envisaged agricultural transformation agenda whose six outcomes are food security, substitution of imports, diversified exports, value addition, job creation, and improvement of people’s incomes and standard of living.

“The Agriculture Recovery Plan as a key flagship plan has been endorsed by Cabinet and launched by His Excellency the President in line with his 2030 vision to empower Zimbabwe and propel all citizens into a country of upper-middle income by 2030. The immediate objective was to reverse the continuing structural decline in food production, most notably in all agricultural value chains, including the cereals and oilseeds sector for households, food security and national nutrition by targeting import substitution.

The best and smartest export an economy could wish for is “not to import what the economy can competitively produce locally,” hence the push for import substitution,” reads the document.

The billion dollar facility to be launched by the African Development Bank for the continent is expected to help Zimbabwe increase its wheat production. We don’t yet know how much this country will receive, but every penny counts.

Zimbabwe is already on a growth path, having reached 330,000 tonnes of wheat last season, up from around 212,000 tonnes in 2020.

Extra efforts are being made to ensure that Zimbabwe is not blocked.

Agriculture has become an important sector for the sustenance of the group’s livelihoods.

It is the economic mainstay of Zimbabwe.

Plans by multilateral and bilateral lenders to inject more money into the sector to tackle the supply side should also allow Zimbabwe to consolidate its prowess in the sector.

Given the impending challenges, this country should not be left behind when it comes to allocations.

The issue of sanctions by the West should not be used to deprive the country of funds yet again and yet it can do much more to impact production.

Europe would be the first to attest to the fact that the fruits and vegetables of this country are more appetizing than many others. Zimbabwe exports them to a number of countries on that continent.

Intra-African trade will also be essential to ensure that African brothers and sisters take care of each other to offset the negative effects of shortages in global markets.

In God I believe!

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