Consumer To Suffer Only For A Short Period

Consumer To Suffer Only For A Short Period
Image Credit: Newsday

An analyst says the outlook of the Zimbabwean consumer will remain challenging at least over a short term of 2019 to 2020 as the government embarks on economic reforms which President Emmerson Mnangagwa describes as “painful” for the country’s citizens.

Consumers are currently facing a myriad of issues ranging from high inflation to fuel shortages and limited access to a stable currency according to Fitch Solutions, a United Kingdom-based research company.

“While pre-election measures such as public-sector pay rises have provided support to private consumption in 2018, purchasing power is under threat because of rising inflation, while businesses continue to face severe liquidity shortages,” the research says.

“Pledged reforms have the potential to improve Zimbabwe’s business environment, and growth prospects, but only in the longer term, since measures will take some time to

Zimbabwe is going under the Transitional Stabilisation Program which promotes production and restricts Government spending, is ongoing with its attendant reform measures.

The country has witnessed the widening of the tax base and fuel prices going up as the authorities implement austerity measures under the economic reforms.

“While economic growth will return in 2019, the recovery is set to be sluggish and government reforms, including a new transitional currency and scaling back of the public wage bill, will have negative impacts on consumer purchasing power,” Fitch Solutions says.

“Over 2018, the value of private consumption contracted by 0.8%. We forecast this to rebound over 2019, growing by 1.1% y-o-y.”

Zimbabwean consumers have been going through tough times, with the energy sector failing to produce enough fuel and electricity for the market.

Consumer price inflation has been mainly driven by a spike in food prices as Zimbabwe’s local currency loses value against the United States Dollar, which is being used to import goods from other countries.

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