Inflation Target Not Good Enough: Economic Experts

With year-on-year inflation expected to ease to 134.8 percent from the year peak levels of 834 percent by December 2021, experts say the target remains too high to accommodate meaningful growth for local businesses, 263Chat Business has learnt.

Presenting the 2021 National Budget, Finance and Economic Development Minister, Professor Mthuli Ncube said the exchange rate stability attained in recent months is expected to lower inflation next year but remain in triple digit figures given that the economy will be recovering from a -4.1 contraction this year.

However, president of the Zimbabwe Economic Society, Dr Nigel Chakira addressing legislators at a Post-Budget Seminar today said macro-economic indicators were still not sufficient to foster growth.

“A more stable economy is what entrepreneurs would ask from government. If you can lower the macro-economic aggregates it would be much easier for businesses to operate efficiently and grow,”

“We have to lower these economic aggregates such as inflation,” said Dr Chanakira.

Prices have continued to go up despite the exchange rate stability since the introduction of the foreign currency auction system in June this year.

However, sentiment in the economy has improved in recent months as witnessed by declines in inflation rate lately.

According to the Zimbabwe National Statistics Agency (ZimStat), annual inflation dropped by close to half in just 4 months to 471.25 percent in October from 837.53 percent in July.

But month-on-month inflation rate for October was 4.37 percent, up 0.54 percentage points from September’s 3.83 percent.

“We need to reinforce economic stability by lowering our inflation rate to guarantee cash flows,” economic experts, Dr Gift Mugano weighed in.

Zimbabwe’s economy is expected to grow by 7.4 percent as it recovers from the damning effects of the COVID-19.

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