The International Monetary Fund (IMF) has predicted that 2023 will be an even darker year for most economies around the world as the world seems like it’s slipping into recession. The institution has also urged most countries to implement austerity measures meant to stem the tide and turn this around. The IMF has pointed at the war in Ukraine which has caused shocks on the world energy markets as well as the still raging COVID-19 pandemic as some of the issues that will likely precipitate a recession in Zimbabwe and a host of other economies around the world.
More than a third of the global economy will contract this year or next, while the three largest economies—the United States,the European Union, and China—will continue to stall. In short, the worst is yet to come, and for many people 2023 will feel like a recession.
Most Zimbabweans will be disheartened to hear this dire prediction as they have already been labouring under tough economic conditions brought on by a host of macroeconomic factors such as high inflation, runaway money printing, corruption, sanctions, and the war in Ukraine among other things. The good news is that the IMF has recommended a cocktail of measures that central banks like the RBZ and the Minister of Finance can implement in order to prevent the worst from happening. Proposed solutions include:
- Tight monetary and fiscal policies aimed at reducing inflation. Zimbabwe has already tightened their monetary policy which has resulted in a bit of liquidity crunch but rates have slowed down significantly.
- The RBZ should act decisively with an inflationary pressures to make sure that rates are tamed
- The government should ensure the RBZ’s independence and allow it to act to combat any inflation and monetary issues without inteference despite the temptation to intervene
- Fiscal authorities through the minister of Finance must be careful when spending money and prioritise importnt areas like healthcare, rebuilding projects as well as the energy sector.