Business confidence falls to -40% in Q3
PHILLIMON MHLANGA
Captains of industry have expressed extreme pessimism regarding the prospects of the Zimbabwean economy, with business confidence plummeting to -40% in the third quarter (Q3) of this year, dragged by cost pressures weighing on profitability and elevated levels of uncertainty, a new CEO Africa Roundtable business confidence index report shows.
The report was presented Friday in the capital during the CEO Africa Roundtable banquet.
The slump in business sentiment was also dragged by haemorrhage exchange rate and currency volatility, among many other problems. Additionally, as businesses battle to cope with price inflation and consumers tighten their purse strings, margins have been squeezed. Debilitating power outages have also resulted in increased costs due to the need to rely on expensive back-up generators.
The value of the Zimbabwean dollar is declining in relation to all major currencies. This week, the formal market saw the local dollar trading at ZWL$5 827.79: US$1, while the black market saw the Zimbabwe dollar trading at ZWL$11 000: US$1. As a result, a lot of businesses use the exchange rate on the black market to determine the price of their goods.
CEOs also stated that businesses are struggling to extricate themselves from the problems caused by inconsistent government policies and high production costs.
“On the overall economic situation, the greater part, which is about 72% of the respondents were of the view that the 3rd quarter of 2023 was worse than the 2nd quarter,” CEO Africa Head of Economics, Tatenda Nyachega said.
He added: “We also asked respondents about key indicators such as company expenditures, sales and profitability and company revenues. Most respondents were pessimistic on how they view the transition from the 2nd quarter to the 3rd quarter with regards to company expenditure, sales and profitability and we only got an optimistic view with regards to company revenue where 43.6% of respondents were anticipating an increase in company revenue.
“With regard to the 3rd quarter, we got an overall index of negative 40.9%, which is a clear indication that the most CEOs and senior executives who gave their insights were pessimistic on how they view the transition from the 2nd quarter to the 3rd quarter.
“They are actually pessimistic about the overall economic performance of Zimbabwe.”
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