- Title: ZIMBABWE : Zimbabwe's devastated economy shows first signs of recovery
- Date: 4th April 2009
- Summary: POLITICAL ANALYST JOHN MAKUMBE IN OFFICE VARIOUS OF MAKUMBE (SOUNDBITE) (English) JOHN MAKUMBE, POLITICAL ANALYST, SAYING: "Things are slow, we are really struggling to get started. The change that the people of Zimbabwe expect is not going to come through easily because basically Zimbabwe doesn't have the money to finance the change processes." SHOPPERS BUYING MEAT (SOUNDBITE) (English) JOHN MAKUMBE, POLITICAL ANALYST, SAYING: "It is a fact that without some really big money coming into the government of Zimbabwe there will not be any meaningful change, or visible change that will occur because it is clearly bankrupt." YOGHURT CONTAINERS (SOUNDBITE) (English) JOHN MAKUMBE, POLITICAL ANALYST, SAYING: "At the moment there is little on the ground to show for it, there are shops which are now getting more and more goods, largely South African goods. Most factories are going to start re-opening today or yesterday the 1st of April and so a few more people will begin to go to work, more schools are now open, a few hospitals are now open. But apart from that there is still very much the status quo."
- Embargoed: 19th April 2009 13:00
- Keywords:
- Topics: Economic News,Domestic Politics
- Reuters ID: LVA85DCLOE3GSVCFNV8OVFDSETTY
- Story Text: Zimbabwe prices fall in sign of improving devastated economy.
Zimbabwe's consumer prices fell in January and February after the government let shops use hard currency and abandon the worthless local money, recent data has showed, in a rare sign of an improvement in the country's devastated economy.
Hyper-inflation destroyed the value of Zimbabwe's own dollar, but the new unity government of president Robert Mugabe and old foe Morgan Tsvangirai has raised hopes of rescuing the once relatively prosperous southern African country.
Data from the Central Statistical Office (CSO) showed inflation at -3.1 percent on a monthly basis in February and -2.3 percent in January. They were the first figures using U.S. dollars so there was no annual comparison.
"Things are slow, we are really struggling to get started. The change that the people of Zimbabwe expect is not going to come through easily because basically Zimbabwe doesn't have the money to finance the change processes," said political analyst John Makumbe told Reuters.
Previous official figures showed inflation at 231 million percent in July, but economists said it rose far higher. The last time official figures showed a month on month fall in inflation was in mid-2005.
"It is a fact that without some really big money coming into the government of Zimbabwe there will not be any meaningful change, or visible change that will occur because is clearly bankrupt," said Makumbe.
Finance Minister Tendai Biti last month projected inflation would fall to just 10 percent by the end of this year as the use of foreign currency would help to stabilise prices.
Shops, which had been hit by a June 2007 price freeze, are now fully stocked and prices of basic goods like bread, meat, flour and maize have fallen as much as 50 percent from December levels.
"At the moment there is little on the ground to show for it, there are shops which are now getting more and more goods, largely South African goods. Most factories are going to start reopening today or yesterday the first of April and so a few more people will begin to go to work, more schools are now open, a few hospitals are now open. But apart from that there is still very much the status quo," said John Makumbe.
The new government has launched an economic recovery programme that envisages political reforms aimed at winning back donor aid, but Western countries remain cautious.
Zimbabwe's central bank governor Gideon Gono earlier this year welcomed the idea of adopting the South African rand as an anchor for the Zimbabwe dollar.
However, analysts have cautioned that it would take more than formally adopting the rand to fix Zimbabwe's economy, and doubt whether the Harare government would be prepared to cede control of economic policy to its big neighbour.
The rand is already used widely on Zimbabwe's black market.
"It would be nice if we could just buy in one currency, if it's just U.S. or just Rand. It will make it easier for the consumers. At least we can buy things now, however I still think the prices are a bit of a rip off if you compare them to what you pay for the same item in South Africa,"
said one Harare resident leaving a supermarket.
"Its like we are now a mini America if we are going to US dollars for everything and its terrible we should actually find a way to fix our own currency," said another Harare resident.
The statistics office said an average family of five people needed an equivalent of 552 U.S. dollars in January for food, rent and other goods in order not to be deemed poor, but the average government worker gets an equivalent of only around 100 dollars a month.
"To use U.S. dollars is better than Zim dollar, because it was difficult to use Zim dollars as prices were changing every now and again, time and again," said a Harare resident at one of the city's food markets.
Zimbabwe is seeking an urgent cash injection of 2 billion U.S dollars from donors to stabilise an economy grappling with unemployment of more than 90 percent and shortages of foreign exchange to pay salaries and critical imports. - Copyright Holder: REUTERS
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