“The country is suffering from hyper-inflation, with . . . reports indicating a yearly inflation of over 20 million percent although the latest official figure was 2.2 million percent as at last June,” the locally owned Kingdom bank said in its weekly financial report.
The bank predicted tougher times ahead for Zimbabwe in the absence of donor support and foreign investment in an economy that has been in free fall since 2000.
An acute foreign currency crisis will continue to hamper production as companies struggle to raise hard cash to buy raw materials and machine spares, it said.
“There being no immediate solution to the socio-economic problems of the country, inflation is likely to continue with the upward trend, because there has been persistent foreign currency shortages that have caused firms to source the commodity on the illegal parallel market at exorbitant rates,” Kingdom said.
The group said a shortage of maize and wheat will cause a significant increase in the prices of the country’s two main staple foods.
Zimbabwe is in the throes of an economic meltdown, and analysts said the crisis had worsened following Mugabe’s disputed and violent re-election in the June 27 presidential run-off which was boycotted by his challenger Morgan Tsvangirai over violence.
A regional leaders’ summit in South Africa at the weekend failed to convince Mugabe and Tsvangirai to agree to form a government of national unity seen as the best way to end Zimbabwe’s unprecedented recession that is also seen in rising unemployment and deepening poverty.
South African President Thabo Mbeki said at the closing of the Southern African Development Community summit on Sunday that the bloc’s security troika would continue to meet with Mugabe and Tsvangirai to try to find a “speedy resolution” to the political situation in Zimbabwe.
Zimbabwe’s rival political leaders are said to agree on nearly all the issues regarding the formation of a unity government but differ on who between them should control the power sharing government. – ZimOnline
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