Zimbabwe Business Watch : Week 45
Only an extended political impasse is likely to prevent growth in the economy as more forecasters predict. The recovery continues as there is so much lost ground to make up.
Recent data shows that factory capacity utilisation continues to climb and is now up around the 30% mark, a huge improvement.
Gold production already exceeds the total for the whole of last year as more and more mines re-open.
GDP estimates have been revised upward again to over 6%.
Local pension funds are the largest owners of equity (15%) and they are now beginning to enjoy net inflows which is yet another good sign.
This good news does not adequately illustrate the steep climb ahead nor the extent to which the economy declined and it is this “catching up” that will often show impressive figures.
On-the -round companies battle daily with cash flow as, without huge foreign capital inflows, there is not enough money to go around to dig business out of the mire. With PAYE then VAT and wages and salaries due in succession, it is almost impossible for companies to maintain adequate cash flow. Often there are still no cheque books and credit cards and virtually all financial transactions have to be effectively backed by cash.
November 9th, 2009 13:50
“virtually all financial transactions have to be effectively backed by cash.”
This is probably a good thing, especially in a wrecked economy that is just starting to recover. When people deal in cash, they know exactly where they are.