Mnangagwa says Zimbabwe should re-examine how it calculates inflation and rates GDP

The rains have favoured us. This, alongside the extensive climate-proofing measures we have adopted as an agriculture-led economy, means we are set to have a good season, itself a key factor to our overall growth. The mining and tourism sectors are doing very well, thus making our growth prospects not just good, but also quite sustainable.

Our banking institutions are in fine fettle. Our financial market is growing in depth, with new instruments being brought to bear, and making any surpluses investible. In this regard, the introduction of gold coins has been outstanding.

To date, some 28 000 coins have been sold, raising some $22,2 billion, or US$27,5million. Until now, all this money was either stashed at home, or was wreaking havoc in our economy through illicit parallel market-related activities.

The Zimbabwe Stock Exchange and its sibling, the Victoria Falls Stock Exchange, have to complement each other for the benefit of our whole economy

Month-on-month inflation, which peaked at 30,7 percent in June 2022, decelerated to less than 2,5 percent by end of 2022. The upward trend of inflation has now been checked, with current efforts focusing on bringing it down even much further. The exchange rate has largely stabilised, putting aside temporary instability late last year triggered by payment to our farmers.

That we are on course, and that the outlook is sustainably good, showed by way key relaxation measures and concessions the Governor made to businesses, and to the general public.

That is as it should be. Every gain we make as an economy must translate to a better operating environment for businesses, and to improved welfare thresholds for the generality of our people.

Amidst all this good news, there are issues and concerns which we must continue to keep an eye on, and even address as an economy. First, the more than US$300m positive balance between our foreign exchange receipts and our external payment commitments must continue to be monitored so they do not upset the applecart.

I am aware that over 70 percent of domestic transactions are in US dollars and cash-based. That, in part, explains where this surplus is, and what it is doing in the economy. I urge both the fiscal and monetary authorities to jointly ensure this huge amount remains in lawful circulation and positively used at all times. It should never live and operate in the twilight of national laws and national transactions.

Second, as the Monetary Policy Statement admits, a mere 30 percent of national transactions are reckoned in local currency.

Yet our conceptualisation and reading of inflation tends to be based on this small segment in the total matrix of national economic activity.

This distortion unhelpfully overlooks what happens to 70 percent of transactions in the economy, all of them done in United States dollars!

I urge both our fiscal and monetary authorities to re-imagine this one critical area so we do not continue to stoke up negative expectations on inflation, which are not justified by realities of transaction in the economy.

Would a blended reading of inflation not be far better and representative in guiding the whole economy, behaviours and expectations around our economy?

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