The Observer - 16 March 2014 - 5
More woes for Zim poor
Z
Business Editor
imbabwe is officially in deflation,
a status which impacts severely on
the poor and has serious across
the economy impacts.
In economics, deflation is a decrease in
the general price level of goods and services,
and a decrease in government, personal or
investment spending. Deflation occurs when
the inflation rate falls below 0%. This should
not be confused with disinflation, a slowdown in the inflation rate.
Generally, deflation has the effect of
throwing people out of employment given the
lower level of demand in the economy, which
can lead to economic depression.
And sadly, the government has no clue on
how to rescue the free-falling economy.
According to the Zimbabwe National
Statistics Agency (ZIMSTAT) Zimbabwe’s
annuallised inflation for February eased to
minus 0.49 percent from 0.41 percent in
January, confirming that the country was in
deflation.
Month on Month inflation rate in Feb was
0.05 percent, compared to 0.14 percent in Jan,
Zimstat said.
Zimbabwe’s slide into deflation was
expected as a result of shrinking economic
activity, deepening the gloomy outlook and
analysts say this would make recovery difficult.
Economists said due to shrinking
economic activity, Zimbabwe urgently needs
fresh foreign capital to stimulate growth. The
decline in economic activity is compounded
by the drop in industrial capacity utilisation,
which fell to just over a third from 55 percent
a year ago.
This is against government’s optimistic
projections that the economy would grow by
five percent this year.
A July 2013 National Social Security
Authority (Nssa) Harare Regional Employer
Closures and Registrations Report for the
period July 2011 to July 2013 shows 711
companies in Harare closed down, rendering
8 336 individuals jobless.
In addition, many companies are
downsizing and have retrenched tens of
thousands of their employees, condemning
them to a gloomy future.
More and more companies are being
liquidated, while others are being placed under
the care of judicial managers as economic
problems besetting the country mount.
Major companies that have retrenched
include platinum miners Zimplats and Unki,
Bindura Nickel, Spar supermarkets, Dairibord,
Saturday morning market outside Bulawayo City Hal
Cairns, Olivine Industries and PG Industries.
According to the Nssa report, 330
companies in Harare in the retail a