TURMOIL: Zimbabwe’s economy contracts as local dollar loses value, GDP shrinks


THE economy shrank in the second quarter of the year with gross domestic product (GDP) at market prices nearly halving to US$3,28 billion from the previous period on the back of a depreciating local currency, latest data shows.

In the first quarter GDP at market prices was at ZWL$6,65 trillion or US$7,15 billion. GDP rebounded in the third quarter to ZWL$41,35 trillion or US$7,56 billion at market prices at a time when fiscal and monetary authorities implemented measures to halt the sharp depreciation of the local currency.

As of November 30, Treasury revealed in the 2024 national budget that the nominal GDP at market prices was ZWL$119,01 trillion or US$20,55 billion.

Responding to NewsDay Business during the presentation of the third quarter GDP estimates, ZimStat national accounts and analysis manager Tapiwa Gumbo said the International Monetary Fund (IMF) had inspected its methodology and agreed with the findings.

However, IMF had raised concern over ZimStat’s competencies and methodology used in determining key economic metrics just two days earlier.

“People sometimes have what they think is normal and should be done, which probably ideally is not what is provided in the manual. So, we try to follow the manual so that our statistics are accurate, are comparable with other countries. So, this is what we try to do and publish because we were presenting a national GDP,” Gumbo said.

“So, what we do here is publish the quarterly annual GDP numbers. So, they (IMF) are checking on our methodology, and data, are we following the systems of national accounts? They scrutinised, provided a second eye to the statistics and reviewed the methodology. We showed them the system, the national accounts database system that we normally use and we agreed.”

He added that the institution did not face any challenges collecting data as it had offices in the districts and provinces that handled the data which made the process smooth.

“I did not want to comment on inflation, but the loose comment that I can make is to say that we collect monthly on prices across the entire country in every district,” Gumbo continued.

“So, what you see is a representation of the data collected from retail, selected retail outlets. So basically, we do not have a challenge because we have provincial offices, we have district offices. We don’t have a challenge in terms of collecting data. That’s for prices.”

He said ZimStat collected data in real-time and computed the indices.

“We collect data from other government agencies that in the process of executing their duties, they are collecting relevant data for national accounts. We collect data from surveys as I have indicated. But for quarterly indices, we benchmark those indicators of economic activities,” Gumbo said.

“We can have leading indicators, and coincident indicators, of economic activity. Those are basically what we apply to tell a story about how the GDP is evolving quarterly. So basically, in terms of collecting data, we don’t have much of a challenge.”

He said ZimStat worked independently and denied any persuasion from Treasury.

The British-based economic researcher, World Economics, and the World Bank, have raised concern about the way the government is collecting data to determine key economic metrics. NewsDay.

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