Industry To "Take Years To Recover" From Zimbabwe Dollar Plunge
Captains of industry and economists say businesses will struggle to recover from the recent Zimbabwe dollar plunge amid revelations that they suffered significant losses.
The local unit depreciated by 273% between May and June 2023.
Speaking to Business Times, the Confederation of Zimbabwe Industries (CZI) president Kurai Matsheza, said:
The businesses in Zimbabwe will need a miracle to recover from the unprecedented losses they suffered heavily during the past two months as most firms are either in debt or operating below capacity which emanated from the loss of value of the local currency.
Companies are still struggling to stock up, hence they will need time to recover if the current stability continues.
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In its latest report, CZI said despite the current stability, companies won’t be able to achieve set targets. It said:
Economies can hardly survive hyperinflation. Although it (the exchange rate) seems to be under control, the damage has already been done on the annual inflation front, as all the set targets are no longer achievable.
Economist Gift Mugano told Business Times that the Government should abandon short-term financing to deal with inflation. Said Mugano:
As long as the government maintains short-term financing, it will certainly backfire in terms of inflation point of view and exchange rate spiral point of view as at one point the authorities will pay contractors and they will come back to the parallel market looking for the greenback.
Another economist who spoke to the publication on condition of anonymity said:
The plunge has left businesses on the brink as the balance sheets were eroded by inflation and it will take years to recover, only if stability continues.
The Zimbabwe dollar has been on the recovery path on the official foreign currency exchange market and has firmed to $4 505 from above $6 000 a few weeks ago.
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