Politics

Russia to grow faster than all advanced economies says IMF

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An influential global body has forecast Russia’s economy will grow faster than all of the world’s advanced economies, including the US, this year.

The International Monetary Fund (IMF) expects Russia to grow 3.2% this year, significantly more than the UK, France and Germany.

Oil exports have “held steady” and government spending has “remained high” contributing to growth, the IMF said.

Overall, it said the world economy had been “remarkably resilient”

“Despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops,” the IMF said.

The IMF is an international organisation with 190 member countries. They are used by businesses to help plan where to invest, and by central banks, such as the Bank of England to guide its decisions on interest rates.

The group says that the forecasts it makes for growth the following year in most advanced economies, more often than not, have been within about 1.5 percentage points of what actually happens.

Despite the Kremlin being sanctioned over its invasion of Ukraine, the IMF upgraded its January predictions for the Russian economy this year, and said while growth would be lower in 2025, it would be still be higher than previously expected at 1.8%.

Investments from corporate and state owned enterprises and “robustness in private consumption” within Russia had promoted growth alongside strong exports of oil, according to Petya Koeva Brooks, deputy director at the IMF.

Russia is one of the world’s biggest oil exporters and in February, the BBC revealed millions of barrels of fuel made from Russian oil were still being imported to the UK despite sanctions.

Russian oil getting into UK via refinery loophole
Away from Russia, the IMF downgraded its forecasts across Europe and for the UK this year, predicting 0.5% growth this year, making the UK the second weakest performer across the G7 group of advanced economies, behind Germany.

The G7 also includes France, Italy, Japan, Canada and the US.

Growth is set to improve to 1.5% in 2025, putting the UK among the top three best performers in the G7, according to the IMF.

However, the IMF said that interest rates in the UK will remain higher than other advanced nations, close to 4% until 2029.

The group expects the UK to have the highest inflation of any G7 economy in 2023 and 2024.

Chancellor Jeremy Hunt said the IMF’s figures showed that the UK economy was turning a corner.

“Inflation in 2024 is predicted to be 1.2% lower than before, and over the next six years we are projected to grow faster than large European economies such as Germany or France – both of which have had significantly larger downgrades to short-term growth than the UK,” he said.

Conflict in the Middle East

Economists at the IMF warned that if the Israel-Hamas conflict escalates further in the Middle East it could lead to rising food and energy prices around the world.

Continued attacks on ships in the Red Sea and the ongoing war in Ukraine could also affect the so far “remarkably resilient” global economy, it said.

A potential spike in food, energy and transport costs would see lower-income countries hardest hit, it added.

Source: BBC

Politics

Zim’s medical aid industry embraces ZiG

AHFoZ's Chief Executive Officer, Ms Shylet Sanyanga — AHFoZ’s Chief Executive Officer, Ms Shylet Sanyanga

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Medical aid societies under the banner of the Association of Healthcare Funders of Zimbabwe (AHFoZ) are optimistic that the newly introduced ZiG will bring about price stability and economic growth.

This comes as the Reserve Bank of Zimbabwe took a significant step on April 5, 2024, by introducing the ZiG currency as a structured currency backed by gold.

Speaking during a Monetary Policy breakfast meeting, AHFoZ’s chief executive officer, Ms Shylet Sanyanga said the introduction of a gold-backed currency has reignited hope in the medical aid industry.

“We are optimistic that the new currency is going to assist the healthcare sector to be sustainable. Members of the public will be able to get good packages using the currency that they have at their disposal,” said Ms Sanyanga.

She also urged all healthcare stakeholders to accept the new currency, emphasising that its value is influenced by public perception.

“We cannot succeed as a country if we do not use our own currency or embrace it. I think we should give it a chance.”

The new currency comes at a time when private healthcare service providers had shifted to charging exclusively in US dollars due to speculation, thereby causing challenges for medical aid societies’ members.

“We are optimistic that our member societies can market their products, consumers will be able to choose and buy products using whatever they have at their disposal.”

Source: Herald

Politics

Zimbabwe to report three sets of inflation numbers

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The Zimbabwe National Statistics Agency (ZimStat) has begun reporting three sets of inflation figures following the introduction of the new currency, Zimbabwe Gold (ZiG), which was introduced by the Reserve Bank of Zimbabwe earlier this month.

Starting this month, inflation figures will be reported in the weighted format, thereafter in US dollar and ZiG figures separately.

Zimbabwe introduced ZiG on April 5, 2024, as part of measures announced in the monetary policy statement to address several issues facing the economy, chief among them exchange rate volatility and rapid inflation increases.

The southern African nation had reintroduced its domestic currency in 2019 after a 10-year pause occasioned by hyperinflation. Between February 2009 and February 2019, the country used a basket of currencies dominated by the greenback.

“Going forward from the April price statistics, the country will publish three price indices with the ZiG index, US dollars Index and the Blended Index. This month we do not have a ZiG price index because it has been rebased according to international practice,” the agency reported.

ZimStat revealed the new inflation reporting format during a press conference for the presentation of the April 2024 month-on-month and year-on-year inflation figures.

The US dollar Consumer Price Index (CPI) was 106,76 in April and 105,96 in March 2024.

Zimbabwe’s US dollar month-on-month inflation rate was 0,8 percent in April 2024, gaining 0,6 percentage points on the March 2024 rate of 0,2 percent.

“This means that prices as measured by the all-items USD CPI, increased by an average of 0,8 percent between March 2024 and April 2024,” Zimstats said.

In the sector month-on-month food and non-alcoholic beverages inflation rate was -0,3 percent in April 2024, shedding 0,4 percentage points on the March 2024 rate of 0,1 percent, whilst the April 2024 month-on-month non-food inflation rate was 1,2 percent, gaining 1,0 percentage points on the March 2024 rate of 0,2 percent.

The US dollar year-on-year inflation rate for April 2024 as measured by the all-items Consumer Price Index (CPI), was 3,2 percent.

“This means that prices as measured by the all-items CPI, increased by an average of 3,2 percent between April 2023 and April 2024 giving us a mean month-on-month inflation rate for the period January to April 2024 of 0,1 percent,” the agency stated.

According to the latest data, the weighted month-on-month inflation rate was 2,9 percent in April 2024, shedding 2,0 percentage points on the March 2024 rate of 4,9 percent.

This means that prices as measured by the all-items CPI, increased by an average of 2,9 percent between March 2024 and April 2024.

“The month-on-month Food and Non-Alcoholic Beverages inflation rate was 4,2 percent in April 2024, shedding 3,9 percentage points on the March 2024 rate of 8,1 percent. The April 2024 month-on-month non-food inflation rate was 2,4 percent, shedding 0,6 percentage points on the March 2024 rate of 3,0 percent,” ZimStat said.

The year-on-year inflation rate for April 2024 as measured by the all-items CPI, was 57,5 percent, meaning that prices as measured by the all-items CPI, increased by an average of 57,5 percent between April 2023 and April 2024.

As a result, the weighted inflation mean month-on-month inflation rate for the period January to April 2024 was 4,9 percent.

With the new currency less than a month old, ZimStat could not compute the ZiG-based inflation figures.

“The ZiG CPI in April 2024 was 100,00. In April 2024, Zimbabwe introduced the Zimbabwe Gold (ZiG) currency. Therefore, the index reference for the CPI for the ZiG currency is April 2024. This means during the month of April 2024, there is no month-on-month and year-on-year inflation rates.

“The month-on-month inflation rate for the ZiG currency will be computed starting in May 2024 and going forward and year-on-year inflation rate will be computed in April 2025 and going forward according to the international recommended methods,” said Zimstats.

Source: Herald

Politics

Imports drive demand for warehousing space

Madokero Business park - Zimbabwe industry

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Demand for warehousing space in Zimbabwe continues to grow due to the significant amount of imports into the country, which remains high despite progress made in promoting local manufacturing.

According to a recent research publication from Knight Frank Zimbabwe, the country’s limited manufacturing capacity has seen the country’s import bill remain high, driving demand for warehousing space, including in industrial zones.

The Southern African nation imported US$9,2 billion worth of goods in 2023 against outbound shipments valued at US$7,2 billion.

Zimbabwe has made progress in localising some of its value chains, but nearly two decades of economic meltdown until about 2017 eroded the country’s capital base, amid limited foreign investment and restoring the glory of yesteryear may take some time.

President Mnangagwa’s administration, which assumed power in 2017, has been working to address several bottlenecks to rebuild the economy, including addressing the country’s debt situation, doing business reform, engaging and re-engaging all global partners and opening Zimbabwe for business with all friendly nations.

“Storage, distribution, and logistics have emerged as the predominant use of industrial space.

“This has been driven by ongoing challenges faced by the manufacturing sector, particularly competition from imported goods,” said Knight Frank Zimbabwe.

The research findings noted that the industrial space has seen increased conversion into warehousing facilities, including areas such as Westlea, Sunway City, Msasa, and Mt Hampden.

This comes as the country has over the years seen an increase in the development of industrial facilities, some of which have since been converted into warehouses.

“There has been a discernible uptick in supply within Zimbabwe’s industrial market, evidenced by developments in key areas such as Westlea, Sunway City, Msasa, and Mt Hampden,” Knight Frank Zimbabwe added.

Furthermore, new warehousing facilities have been developed along the Airport Road, strategically positioned near the airport, offering convenient access for businesses seeking efficient transportation and logistics solutions.

The research publication noted the emergence of new industrial parks and spaces in Pomona, Msasa and Arlington, near Chitungwiza.

These facilities were developed to meet the changing requirements and demands of the market.

“Additionally, the emergence of new industrial parks and spaces across Pomona, Msasa, and Arlington offer modern facilities to meet evolving market demands,” Knight Frank Zimbabwe said.

Warehouses in Zimbabwe are designed to meet a broad range of needs, catering to various industries such as plasticware and cardboard. The designs primarily prioritise affordability, aiming to serve the growing population of low to middle-income individuals in the country.

Knight Frank Zimbabwe said: “The majority of warehouses in Zimbabwe cater for a diverse range of needs, from plasticware to cardboard, primarily targeting affordability to serve the expanding population of low to middle-income citizens.”

The demand for industrial space spurs economic growth by indicating a vibrant business environment and creating employment opportunities, attracting investments, and promoting business development which leads to increased productivity and innovation.

The potential returns on investment for industrial space can vary between 11 percent and 13 percent depending on the specific location in which it is situated.

Knight Frank Zimbabwe added that “Depending on the location, industrial space yields range from 11 percent to 13 percent.”

According to the publication, average rental rates for industrial space remain steady at US$3 per square metre for spaces less than 1 000 square metres and US$1 for larger spaces.

Source: Herald