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Zimbabwe Economy Downward Slide Continues

Econet Wireless Zimbabwe

Zimbabwe’s economy looks bleak for the remainder of this year with leading companies, Econet Wireless Zimbabwe and Delta Corporation , seeking tough ways to cut costs.

The World Bank, in its latest report paints a gloomy picture of Zimbabwe’s economic situation.

The Bretton woods institution says the economy is expected to grow by only one percent this year, on the back of a sustained liquidity crunch and under performance in all sectors.

Delta, which is 38 percent owned by global brewing giant, Sabmiller, said it could be forced to retrench workers as part of its cost cutting measures because business performance has been on a downward spiral due to weakening aggregate demand and high operating costs.

Delta says sales of the cheaper sorghum beer, which had registered double digit growth since 2009, declined 12 percent year on year during the quarter of June, as consumer spending went down.

The country’s largest mobile telephone company, Econet Wireless, last month asked its local and foreign suppliers to slash prices by at least 15 percent and announced pay cuts as an economic slowdown catches up with one of the fastest growing sectors.

The government says the economy is expected to flatline this year due to low global commodity prices which will impact mining production, low foreign investment and company closures as a result of power shortages and expensive finance.

Chief economist, Prosper Chitambara of the Labour and Economic Development Research Institute of Zimbabwe tells VOA Studio 7’ that the country’s economy is gloomy even beyond this year.

“ I think the economy has stalled,” says Chitambara. “There are a lot of challenges affecting the economy. When you look at subdued domestic and foreign direct investment owing to things like liquidity crunch and owing to subdued aggregate demand; the high cost of business, these are some of the issues.”

He said all this has resulted in the World Bank having to reduce Zimbabwe’s growth prospects, adding plans to retrench by Delta and Econet shows the extent of the country’s economic crisis.