HARARE – Zimbabwe should move into positive inflation in 2016, with regional economists projecting an annual inflation rate of 1,5 percent by the end of 2016.

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The African Development Bank also estimated that the country’s inflation rate will close this year at 0,6 percent.

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The bank’s Field Office chief regional economist Ms Mary Manneko and United Nations Development Programme (UNDP) economic advisor Mr Amarakoon Bandara

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who penned Zimbabwe’s note in the African Economic Outlook 2015 – say the country’s current negative inflation is attributable to three factors.

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“Against the background of weak domestic demand, tight liquidity conditions and the appreciation of the US dollar against the South African rand, inflation was slightly negative in 2014, and it is projected to remain low in 2015,” they said.

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Latest stats from the Zimbabwe National Statistical Agency (ZimStats) show that the country’s annual rate of inflation lessened to -2,65 percent year-on-year in April after dropping 1,45 percentage points on the March rate of -1,20 percent.

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Deflationary pressures continue to persist within the economy – mainly low demand – and the International Monetary Fund (IMF) has projected the deflationary trend to continue into 2016.

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But the AEO 2015′s more optimistic outlook is reflective of projected Gross Domestic Product (GDP) growth – reflecting marginal gains both this year and next – from the estimated 3,1 percent GDP growth recorded in 2013.

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According to the report, Zimbabwe’s economy will grow by 3,2 percent this year, and by a further 3,3 percent in 2016.

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The report has urged the Zimbabwean authorities to continue implementing key structural reforms in order to improve the local doing business environment.

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“There is a need to continue implementation of structural reforms to improve the business environment, achieve a sustainable current account balance, reform public enterprises and make growth more inclusive,” reads part of the report.

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Zimbabwe is currently working with the IMF to improve its macro-economic policies under a second Staff Monitored Programme.

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If successfully implemented, SMP II could restore the country’s access to external financing. – BH24