‘Economy running out of steam’

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THE Zimbabwe Stock Exchange will remain pressured as the economy still lacks the impetus for growth, a local research firm has said.

VICTORIA MTOMBA

In its review for January, MMC Capital said the economy was running out of steam and funding remained the missing piece on the puzzle.
The country, according to the Zimbabwe Agenda for Socio- Economic Transformation (ZimAsset), requires $27 billion in the next five years for the implementation of the blue print.

The country is yet to attract funding from investors as Treasury is still trying to look for funds to oil the economy.

MMC Capital said economic indicators that were released last month reflected a slowdown in economic growth while
aggregate demand was subdued as increased pressure was exerted on disposable incomes.

“The beverages giant’s (Delta) depressed numbers confirm that the local consumers’ wallet continues to reel under immense pressure as consumer needs continue to outpace the growth in incomes,” MMC said.

“The reduction in consumer spending poses headwinds for Zimbabwe as this results in less demand for goods and services. With falling demand, companies will reduce production; implement cost-cutting measures; lay off workers – resulting in economic contraction.

“We maintain our overweight rating on the telecoms, consumer and retail-oriented as well as the agriculture sector. We believe investors will reap positive return if they take selected positions in these sectors as they are consumer-oriented and we believe consumer demand will remain relatively strong.”

During the month of January, the industrial and mining indices declined by 6% and 23% respectively due to the low demand that the month is associated with. The industrial index closed the month at 189,25 points from 202,12 points in December while the mining index ended the month at 35,40 from 45,70 points in December last year.

Monthly traded turnover stood at $63,97 million,  which was higher than the December 2013 figure of $49,20 million.

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