Contain inflation to reduce poverty: World Bank

POVERTY levels in Zimbabwe will increase this year if monetary authorities fail to contain inflation, a World Bank (WB) official has said. According to Zimstat, extreme poverty in Zimbabwe rose from 22 percent in 2012 to 29 percent in 2017, and is likely to have risen further to as much as 38 percent in 2019 as the economy continues to rapidly deteriorate. Speaking at the Confederation of Zimbabwe industries (CZI) 2020 economic Symposium Outlook and 2019 Manufacturing Sector Survey Launch, WB senior country economist Stella Ilieva  said Zimbabwe’s poverty would increase unless government adopts mechanisms that would result in stabilising the exchange rate on the parallel market and prices of goods and services. “Zimbabwe’s inflation is highly driven by lose of value of the local currency on the parallel market against major trading currencies. “Unless inflation is contained poverty will increase in Zimbabwe…Food poverty is increasing with about 5,5 million being classified as poor and in need of food assistance,” she said.
The symposium was hosted by CZI in partnership with the country’s premier business and financial newspaper, The Financial Gazette. “The government must maintain prudent fiscal policies in order to contain rising inflation. Zimbabwe’s inflation has been one of the highest in the world,” said Ilieva.  According to CZI Zimbabwe’s annual inflation peaked at 525 percent in December. Ilieva said uncertainty was very high globally and locally and hence the need to be consistent with prudent fiscal policies to increase productivity, stabilise prices and enhance trade. “Drought being experienced will have a negative impact on all sectors of the economy especially agriculture… “The economies of Zimbabwe’s major trading partners are projected to grow faster this year than before which means external demand will be higher,” Ilieva  said. while the government says the Gross Domestic Product (GDP) shrunk by -6,5 percent in 2019, the world bank believes it contracted by a further one percent during the same period because of “floods, storms, low agricultural production, and extreme weather temperatures”, among other things.

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