ZIMBABWE’s economy continues to wallow in distress due to poor economic performance and the predominance of the informal sector, a Confederation of Zimbabwe Industries (CZI) report shows.
The absence of foreign direct investment inflows, high national debt, a high trade deficit, investor uncertainty over government policies and depressed economic sector performance are among factors that have led to increased company closures and increasing unemployment.
In the June 2014 economic update, the CZI said government’s value added tax (VAT) collections year on year stood at -0,34% while month on month increases stood at 13,98%.
Total government revenue recorded a negative figure of -0,63% during the period under review.
“The year to date growth on prior period statistics shows poor performing government revenue, reduced VAT collections depressed imports and exports and an increase in the fuel bill,” the report reads.
Diesel Imports as measured in litres went up by 14,59% on a year on year basis while petrol imports recorded -10,83% year on year.
The report noted that with poor performance of the economy against an increase in fuel consumption, it may be concluded that there is increased informalisation.
The informal economy refers to activities and income that are partially or fully outside government regulation, taxation and observation.
Economists argue that increased informalisation is reflective of low levels of economic development.
Zimbabwe’s informal sector is estimated to be well over 40% in composition as compared to South Africa at 17% and Malawi at 13%.
The Zimbabwe Stock Exchange Industrial Index recorded a depressed figure of -11,66% year on year and Mining Index witnessed a low figure of -16,33%.
However, the CZI report said month on month total imports during the period under review stood at 3,55% while exports increased by 29,19%. Meanwhile, the CZI said preparations for the Quarterly Business Confidence Index Development are now at an advanced stage.
The index is aimed at providing timely information to policymakers on the state of the manufacturing sector.
The confederation said it will this week host Christian Haedo, an expert in indices from Switzerland who will be on a mission to assist the CZI to develop the Quarterly Business Confidence Index.