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Johannesburg - A bleak medium-term outlook for Zimbabwe's economy is maintained by Standard Bank's economists, who said on Thursday they expect the economy to continue to contract in 2008.
"Zimbabwe's political landscape continues to be one of repression of opposition, limited freedom of speech and press, patronage and ethnic-based politics and complete erosion of domestic institutions," they say.
"The scheduled June 27 run-off presidential election continues to overshadow any genuine debate on economic reforms in Zimbabwe."
They note that the governor of their central bank recently acknowledged that the country continues to face significant challenges.
"These are worsened by extremely high levels of inflation, shortages of foreign exchange, poor energy supply and shortages of drugs. Productivity has declined significantly and coupled with about 80% unemployment, businesses are barely managing to keep afloat," say the analysts.
Recent exchange rate liberalisation will only add to the inflation burden as the economic fundamentals are still lacking.
"Overall, any genuine policy discussion depends on the outcome of the run-off presidential election. Investor confidence is also at its lowest and most international businesses and the donor community are waiting for a change in government before they re-engage with the country.
"However, political changes alone will not be enough as strong and coherent macroeconomic policies will be necessary to rebuild what used to be Africa's model economy," conclude the researchers.
- I-Net Bridge