Zimbabwe c.bank revises up its year-end inflation forecast as currency weakens
HARARE, Oct. 4 (Reuters) – Zimbabwe’s annual inflation rate could end the year between 35% and 53%, down from an earlier estimate of 25% to 35%, the central bank said in a statement shared with the journalists on Monday, as the local currency fell sharply on the black market.
Policymakers in the southern African country still haunted by memories of hyperinflation and currency collapse initially wanted to bring inflation below 10% by the end of the year, but revised this goal up twice now.
Inflation fell sharply in the first half of the year, from around 363% year on year in January to 56% in July, before stabilizing above 50% in August and September.
“Developments in the parallel foreign exchange market are likely to put further inflationary pressures on the economy,” central bank governor John Mangudya said in a September 27 statement.
“Based on recent developments, annual inflation is expected to end the year between 35 and 53 percent, up from revised year-end targets of 25 to 35 percent.”
On the black market, the Zimbabwe dollar weakened from around 130 per US dollar in April to 170 currently for electronic transactions.
During this period, the official rate rose from around 84 to 87 for the US dollar.
Much of Zimbabwe’s economy relies on the black market to source scarce foreign currency, despite the central bank insisting that the economy generates enough dollars to meet demand.
Finance Minister Mthuli Ncube said in July that gross domestic product is expected to rise 7.8% this year after two years of recession, helped by rising commodity prices and a better harvest.
(Report by Nelson Banya Editing by Alexander Winning, Kirsten Donovan) (([email protected]; +27 10 346 1076)) Keywords: ZIMBABWE CENBANK /
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