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Zimbabwe's Central Bank Predicts Positive Economic Growth


In a major economic statement Wednesday ahead of Zimbabwe's elections expected in March, the central bank says the country's economy has turned the corner and predicted a recovery for 2005. Gideon Gono, governor of Zimbabwe's Reserve Bank has become more prominent than any of his predecessors and many analysts believe he is only second in power and influence to President Robert Mugabe.

Attendance at Mr. Gono's quarterly monetary reviews at the central bank is always jam-packed. His statements are seen as more important than any from the central government, including the annual budget.

Mr. Gono's close relationship to Mr. Mugabe has given him the power to guide Zimbabwe through uncharted economic waters in order to turn the economy around.

Mr. Gono said Zimbabwe's inflation at 132 percent, although massively reduced from more than 600 percent a year ago, remained the highest in the world.

Without providing any details on how the economy will improve, Mr. Gono predicted positive growth for the first time in five years.

"The economy which had contracted for the fifth successive year from 8.3 percent in 2003, to an estimated decline of 2.5 percent in 2004 with a rebound into positive GDP growth which is expected this year to be between three and five percent on the back of sustained effort," he said.

Mr. Gono warned that Zimbabwe's state enterprises, called parastatals, as well as local governments could derail a recovery. Among the enterprises he named was Zimbabwe's run down rail network.

"A radical necessary and long overdue shake up of parastatal and local authority sectors to remove the costly supply side bottlenecks which these parastatals and local authorities continue to induce in the production and distribution chains as well as the general quality of our peoples lives," he said.

Mr. Gono said Zimbabwe needs to attract foreign and local investment and will have to restore respect for property rights and international trade agreements. He said Zimbabwe could now move ahead as redistribution of white-owned land was almost complete.

Veteran economist, John Robertson said analysis of Mr. Gono's statement was more about exalting Zimbabweans to do better than about economic recovery. He said further reduction in inflation was unlikely but said Mr. Gono's statement about property rights was encouraging.

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