Zimbabwe: Recession, Zimbabwean Dollar Return and the Economic Outlook

As the country enters the last half of the year and warms up to the re-introduction of the Zimbabwean dollar, it is now evident that the economy is swiftly sliding into a recession. In 2018, the economy grew by an estimated 4%, driven by growth in agriculture, mining and record exports of commodities. The current year started on a grim note with January inflation hitting 56,9% before expanding to 97,9% in May 2019. The June inflation figure will eclipse 100% to confirm the re-admission of the local economy into the recession mode for the first time since 2008. The International Monetary Fund (IMF) predicted that Zimbabwe's economy will contract by 5,2% before revising the figure to 2,1% in line with the deliverables in the Staff Monitoring Programme (SMP). The World Bank points that the Zimbabwean economy is now in recession and will shrink by 3,1% in 2019. The major constraints for the economy emanate from structural challenges in governance being met in implementing economic reforms, hyperinflation, foreign currency liquidity shortages, power outages, political instability and the prevailing drought among others.

A recession is a significant decline in economic activity spread across the entire economy, lasting more than a few months and normally visible with a drop in Gross Domestic Product (GDP), real income, consumer demand, employment, industrial production and company closures.

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