Zimbabwe President Emmerson Mnangagwa today said the government should re-examine how it calculates its inflation considering that 70% of the transactions in the country are now in United States dollars yet inflation is calculated using the local currency which accounts for only 30% of the transactions.
Writing in his weekly column in the Sunday Mail, Mnangagwa asked whether it would not be better to use blended inflation.
The Zimbabwe National Statistics Agency is already publishing both the nominal and blended inflation rates but it is the nominal that is dominating coverage.
Last month for example, annual inflation was put at 229.8% while the b;lended rate =stood at 101.5% which is still quite high.
Month-on-month inflation dropped to 1.1% but the blended rate was down to 0.7% .
Mnangagwa said he also believed that the country’s wealth was being understated.
“I am far from being convinced that the current size of our economy, which is put at between US$26 billion and US$27 billion, does justice to our real worth. My hunch is a lot of value remains uncaptured and thus unstated or understated. For instance, how is the informal sector accounted for in this global value?” he asked.
“Equally, how complete is the inventorying of our real estate economy? Even on-farm developments appear to fall outside a reading of our GDP! Yet this is one area where the Zimbabwean economy has been particularly outstanding. Overall, we need and have to re-imagine our economy as it transforms for the better,” he said.
Re-imagining the Zimbabwe economy
The Governor of the Reserve Bank’s first Monetary Policy Statement for the year 2023 raised key substantive points in respect of our economy. For that reason, the governor’s Monetary Policy Statement deserves further reflection and interrogation. I have decided to devote my piece for this week to share with our nation my own reflection on this loaded monetary statement.
Set against likely trends in the global economy, the Governor’s statement confirms that Zimbabwe’s economic activity remains robust, supported by strong foreign currency receipts.
It discloses that our total foreign currency receipts reached US$11,6 billion in 2022, the highest ever in the history of our country, and certainly since our Independence. The country’s balance of payment position remains in surplus position, driven by robust export performance and remittances.
Our foreign currency receipts of more than US$11,6 billion serviced our external payments of about US$8,6 billion, thus leaving us with a healthy surplus of US$305 million.
Diaspora remittances increased by 14 percent in 2022, to US$1,66 billion. The foreign currency auction backlog meant to support business has been cleared, while the willing-buyer, willing-seller mechanism is working very well, and reinforcing the foreign currency auction system.
Both will continue in 2023, thus ensuring greater access to foreign currency for the business sector.
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