Hawkins predicts further decline in economy despite Gono’s policies
By Violet Gonda
11 January 2007

2006 was a trying year for Zimbabweans and 2007 is going to be a very tough year. This is according to economist Tony Hawkins. He said inflation is going to be a great deal higher than it has been, the exchange rate is going to depreciate a great deal, output production will continue to decline and businesses will find their cash flow squeezed.

The economist said to reverse the economic crisis the solution has to be political but there is no sign of any political change.

Giving his 2007 economic outlook on SW Radio Africa Hawkins said Reserve Bank Governor Gideon Gono’s policies have also failed. “He came with all the promises to reduce inflation which was about 580% when he took over and to turn the economy around. Well three years later the economy is still going down hill and inflation is probably double or slightly more than when he started,” he said.

Hawkins also believes bad government policies, like the November Budget, have put Zimbabwe on a very inflationary path. He said; “Only solution to inflation is to reduce government expenditure. But to say reduce government expenditure is like saying commit political suicide to this government because the only thing that keeps the government going is that they can spend money which they have printed.”

Critics accuse the government of also mortgaging the country’s minerals to get much needed foreign currency. Hawkins believes there is a lot of smuggling of minerals like gold and diamonds which don’t go through the official channels but the parallel market. “And the most frightening thing is what we are seeing is the flood of new vehicles in the country which appear to be paid for by people who are getting access to this cheap foreign currency.”

It’s reported some parastatals have been spending vast amounts of money for new vehicles. On Sunday, The Standard newspaper also reported that the Reserve Bank Governor recently imported a luxury car costing US$365 000, in a country struggling to cope with a critical shortage of foreign currency.