Zimbabwe's economy recovering

London - Zimbabwe's economy has turned around in the past four months, with employment and industrial capacity use doubling and once record-breaking inflation under control, the minister for economic planning said on Tuesday.

The recovery follows an effective dollarisation of the economy, which has helped spur foreign investment and prompted the large Zimbabwean exile community to send more remittances home, planning and investment minister Elton Mangoma said.

"When we came into office in February, we had employment of 6% and capacity utilisation of less than 10%," he said during a mining conference in London.

"Our production capacity has now gone up to between 20% and 30% and employment is now around 15%, and those who are employed are a lot more secure because they can see that the companies are a lot more steady," he said.

Over the same period, since the new unity government under Prime Minister Morgan Tsvangirai took office in mid-February, inflation has fallen rapidly from its once astronomical 200 million percent, while growth has begun to pick up.

"This year we are looking at growth rates of anything between 3% and 5%," said Mangoma, a businessman before joining the government after a power-sharing agreement was struck between Tsvangirai and President Robert Mugabe.

"From next year onwards, we are looking at double digit growth from a very low base. At least for the next 10 years, we can look at double digit GDP growth rates."

He said the country would stabilise with an inflation rate of "no more than three percent" by December. "That will be a sustained rate," he said.

Interest rates have come down, with the highest rate at 15% and broad borrowing costs at around 8%, he said.

"As the risk factor goes down, the interest rates will come down with it. So in fact, I don't expect there to be any pressure on inflation because of interest rates," he said.

- Reuters