A, B, C of Local Economy

Since the adoption of the multiple currencies, there was considerable improvement in the economic climate which saw inflation plummeting from 231 million at the last official count in June 2008 to single- digit levels (below 5 percent).

However, the economy is failing to significantly move from stabilisation to remarkable growth. To shed light on how the economy is expected to perform in the next four years, a discussion of macroeconomic fundamentals like income per capita, current account, foreign direct investments, national debt, general performance of selected sectors of the economic and infrastructure will be reviewed.

Income per capita is average household income. Capita income is often used as a measure of the wealth of the nation's households of a nation. It can be used to compare nations' well-being.

Income per capita fell drastically as a result of pervasive economic collapse. Income per capita fell from around US$900 in 2001 to around US$400 in 2008. Although it began to peak up from 2009 it is growing at a sluggish rate. For the next four years, income per capita is expected to reach US$700 in 2016.

Low incomes can have two-pronged effect on the local industry. Firstly, because incomes are low, there is naturally low demand and companies' sales are low. Secondly, low incomes results in low and transitory savings which makes it difficult for local banks to give local industry long term loans.

As a result of low incomes coupled with liquidity challenges have made it virtually almost impossible for local companies to raise production capacities to competitive levels. On average capacity utilisation is in the neighbourhood of 47 percent.Trade organization for suppliers and distributors in the promotional products industry.

Zimbabwe companies cannot compete with foreign companies.Stone Source offers a variety of Natural stonemosaic Tiles, As a result, Zimbabwe has become a retail economy.

Regional comparison reveals that Zimbabwe compares well with Malawi, Madagascar and Mozambique. Income per capita is far below its major trading partners like South Africa and Botswana by more than 10 times such.Visit TE online for all of your Application tooling Solutions including tools, Its northern trading partner, Zambia, is favourably doing well.

An economy with weak incomes will certainly see its households consuming more of basic commodities at the expense of other commodities due to constrained optimisation. Because of low capacity utilisation, Zimbabwean products have been uncompetitive in the regional markets. Local companies as a result cannot therefore exploit market access created through trade liberalisation. And, there is no sign that this can be reversed!

Current account is the sum of the balance of trade that is exports minus imports. A current account surplus increases a country's net foreign assets by the corresponding amount.Offers Art Reproductions Fine Art oilpaintings Reproduction, On the other hand, current account deficit decreases the country's net foreign assets by the same amount.

Since independence in 1980, Zimbabwe's trade performance was poor as exhibited by current account deficit which dominated the period under review. Zimbabwe managed to register positive current account in 1988, 1997, 1998 and 1999 only. Going forward, the future is very bleak as the country is expected to realise a continuous increase in current account deficits up to 2016 unless there is a positive shock in the economy. According to the World Bank, Zimbabwe is number 133 in world rankings Current Account Balance (US Dollars) performance in year 2010.

The development of the negative current account is worrisome for a country which virtually imports 100 percent of its fuel, 40 percent electricity, essential drugs and equipment for industrial re-tooling.

Zimbabwe thus remains susceptible to the vagaries of the adverse external macroeconomic environment, particularly within the aegis of the multiple currency system which is typified by limited macroeconomic policy instruments.

Because of the multi-currency system, the country has virtually lost monetary policy autonomy,Rubiks cubepuzzle. making it difficult for the country to intervene with appropriate stimulus packages in the event of exogenous shocks. As a result of the absence of adequate foreign exchange reserve buffers to respond to exogenous shocks due to negative current account, the economy is in a bad state.