Zimbabwe’s economy remains in depression since 1999 that is presently experiencing food shortages and extreme high unemployment at 70 percent. Upwards of 25 percent of the population emigrated to seek economic relief abroad, total current population stands at 12.7 million.
Total GDP as measured by purchasing power parity stands at $25 billion USD (2004) with corresponding GDP/Capita at $1,900 USD. From year 1999-2003, GDP fell 40 percent. Year 2004 GDP growth fell 8.2 percent, 2003 fell 9.3 percent. Inflation for February 2005 annual rate at 127 percent, inflation is presently running at 265 percent year-on year although current inflation is lower at 100 percent approximately (8 percent month-on month). June 2004 inflation at 450 percent, inflation peaked in January 2004 at 623 percent. The repo interest rate stands at 200 percent. Annual fiscal deficits are the norm coupled with large current account deficits. The mining industry is one of the last major income producing industries still functioning. Foreign exchange reserves are negligible, Zimbabwe is a net oil importer.
CURRENCY: ISO Symbol ‘ZWD’, Zimbabwean dollar, Zim dollar. At time of review on September 20, 2005 the Zimbabwean dollar had a market exchange valuation of 26,002 ZWD to the US-dollar (USD). In early August 2005, the ZWD plunged 23 percent to 24,025 ZWD to the USD. The black market exchange rate usually trades at a market rate that is double the official exchange rate. Zimbabwe’s central bank manages the exchange rate by selling foreign currency at twice-weekly auctions. In January 2004, the then new Central Bank governor implemented central bank foreign currency auctions in an attempt to reduce black market trading.
CURRENCY HISTORY: at independence in 1980, the official exchange rate was at a very surprisingly 0.5 ZWD to the USD reflecting Zimbabwe’s then strong economy. An absolutely stunning debasement of value over the last 25 years has taken hold. Historical black market quotes include: December 2003 at 7000 ZWD to the USD, spring 2005 at 14000. During August 2000, a 24 percent official devaluation occurred. In July 2005, a second devaluation in as many months with the new official rate at 17500 ZWD to the USD, the previous official rates have included 10800 ZWD for May 2005 and January 2005 at 5900.
CURRENCY FORECAST: economy is in disarray, the government is essentially broke although it did recently make a $170 million USD IMF payment. A change in government may provide for better living conditions and a stabilized economy. Zimbabwe has the world’s second largest platinum reserves behind that of South Africa. Historical industries have included tobacco growers, platinum, maize, minerals & metals (diamonds, gold, silver, copper, nickel, coal). Zimbabawe has great potential with its natural & agricultural resources. Zimbabwe once was a prosperous country, a change in government may return the nation to historical wealth. Farming use to be the backbone of the economy, it is now decimated. A return to political economic sound policies would greatly benefit the people of Zimbabwe. Until then, the ZWD remains a very dangerous currency. On a positive note, some reports have the economy actually turning a corner for 2005 with modest GDP growth albeit from a much reduced level.
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UPDATED: September 20, 2005