Zimbabwe's annual broad money supply (various forms of money) rose only by 1.18 percent in August, up 38 percent from August 2018, compared with a 47 percent annual growth in July, Zimbabwe's reserve bank (RBZ) says.
A wide range of money – such as banknotes and coins; shorter bank deposits, bank deposits that can be recalled after three months, money market fund shares and debt securities that mature within two years – were affected by sight deposits and cash in circulation. Monthly monthly gross money increased by 1.18 percent, from 9.682 billion dollars in July 2018 to 9.796 billion US dollars in August 2018, RBZ said. Prices are rising when the supply of money overtakes too quickly – faster than productivity – because there is a situation where relatively more money is pursued by relatively less goods.
In its monthly economic update for August 2018, the Central Bank said that the nominal volume of broad money supply had risen to $ 9.797 billion, compared with $ 7.708 billion in the 12 months to August 2017.
"The growth of the money supply reflected the annual increase in deposits by cash flows, 48.93% and the currency in circulation, 131.01%. The increase partially offset the annual decline by 6.43% and 5.03%, in transferable deposit certificates (three deposits ) and narrower applications, "said RBZ.
Wider money in circulation consisted of sight deposits, 79.05 percent; time deposits, 15.56 percent; currency in circulation, 4.71 percent; and transferable deposit certificates (NCDs), 0.68 percent. Money supply is the total stock of currencies and other liquid instruments circulating in the economy of the country from time to time. The money supply may include cash, coins and balances on accounts and savings accounts.
Economists analyze money supply and develop policies that revolve around it by controlling interest rates and increasing or decreasing the amount of money that flows in the economy. In a holding where the central bank has a complete monetary policy, the increase in money supply generally lowers interest rates, which creates more investment and gives consumers more money, thereby encouraging spending.
Enterprises respond by ordering more raw materials and increasing production. Increased business activity is increasing demand for labor. Conversely, it can happen if money falls or when its growth rate decreases. Credit to the private sector increased by 3.94 percent in August 2018, compared to an annual increase of 4.80 percent in the previous month. On a monthly basis, the loan to the private sector rose by 2.16 percent, from $ 3,646 million in July 2018 to $ 3,724 million in August 2018.
Loans to the private sector were used to increase stocks (24.07 percent); permanent consumables (21.25 percent); investments in fixed assets (12.45%); and financing before and after sending (1.77 percent). Other current expenditure accounted for 40.46 percent of all outstanding loans in the reporting month.
At sectoral level, households accounted for 26.84% of loans, followed by agriculture, 18.96%; distribution, 13.36 percent; services, 12.32 percent; manufacturing, 10.91%; financial organizations and investments, 7.40 percent; mining, 4.51%; construction, 3.14 percent; and transport and communications, 2.11 percent.