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Zimbabwe crisis threatens to throw SADC targets off rails
ZimOnline
August 14, 2006

http://www.zimonline.co.za/headdetail.asp?ID=12665

GABORONE - The contagion effects of Zimbabwe's economic meltdown are beginning to be felt by the Southern African Development Community (SADC) amid fears the bloc could miss its regional integration targets.

The Zimbabwe crisis threatens to derail the region's plans to move towards a free trade area by 2008 and a customs union two years later.

According to senior officials at SADC's Gaborone headquarters, the contagion effects of the Zimbabwe crisis are beginning to slow down the region's war against inflation.

The majority of member states have managed to tighten their monetary policies and maintain low inflation rates at single digits.

Countries such as Angola and Zambia, which used to have high inflation rates, managed to halve inflation on the back of less expansionary fiscal policies and currency appreciation.

"Zimbabwe, on the other hand is going the opposite direction. In fact, the effects of its high inflation on the region are such that the regional average shot to 23 percent against 10.8 percent if the country's figures were not factored in," a senior SADC official told ZimOnline on condition he was not named.

Zimbabwe currently has the highest inflation in the world, pegged at 993.6 percent in July.

The average real Gross Domestic Product (GDP) growth of five percent in 2005 indicates an overall increase in the macroeconomic performance of SADC countries despite the disparities among member states.

Angola had the highest growth rate at 15.6 percent, followed by Botswana at 8.3 percent, Mozambique at 7.7 percent and Tanzania at 6.9 percent GDP growth.

Average regional economic growth is estimated at six percent in 2006.

High money supply growth and the existence of an unregulated and turbulent parallel economy - which has become the most reliable source of jobs, goods and service for many Zimbabweans - are blamed for fuelling inflation in the country.

Hyperinflation is one of many severe symptoms of Zimbabwe's six-year old economic crisis that has also spawned shortages of fuel, electricity, essential medicines, hard cash and just about every basic survival commodity.

The main opposition Movement for Democratic Change party and Western governments blame the crisis on repression and wrong policies by Mugabe such as his seizure of productive farms from whites for redistribution to landless blacks.

The farm seizures destabilised the mainstay agricultural sector and caused severe food shortages after the government failed to give black villagers resettled on former white farms skills training and inputs support to maintain production.

But Mugabe, who has ruled Zimbabwe since the country's 1980 independence from Britain, denies mismanaging the country and says its problems are because of economic sabotage by Western governments opposed to his seizure of white land. - ZimOnline

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