Zimbabwe Business Watch : Week 17
April 20th, 2009
The financial institutions remain hamstrung with a lack of cash to fund business that so desperately requires support in order to survive.
Industry is still faced with high costs and retaining markets is becoming expensive in terms of lost profit. Added to this, the global recession and the consequential reduced demand for goods have impacted at a time when manufacturers and miners are hard pressed.
Zimbabwe pays a premium for its petroleum products which again reduces competitiveness. This will not change until the economic revival is funded by western donors, which is unlikely unless the Transitional Government and the Prime Minister are able to operate unimpeded by political intransigence.
More mining groups are preparing to begin operations that had halted over the last 12 months.
The cost of living continues to drop which in turn has boosted the retail sector albeit marginally.
The Hard Boiled Egg Index, which demonstrates ‘fair value’ of a currency, now reflects buying power and inflation.
In Zimbabwe, 1 US$ can now buy 5 eggs, up from 4 a month ago. This also indicates an improvement in supply and increased market competition. At 5 eggs, Zimbabwe is reaching the purchasing power parity of Mozambique, and Zambia is sitting at 5.7 eggs per US$ currently.
