Measuring the second economy in Zimbabwe

Abstract

The second economy in Zimbabwe have grown from less than 10% of official GDP at independence in 1980 to an all-time higher share of 70 percent in 2008 before subsiding to a still higher percentage share of 52% by end of 2009. The existence of such a sizeable sector of unrecorded domestic and international economic transactions has several implications relevant for policy. First, it suggests that cconsiderable efforts will need to be made by the national accounts section in the Central Statistical Office (CSO) to establish systematic estimates of the major components of the second economy with a view of incorporating these into the official national accounts series. Second, coexistence of informal, parallel and black market activities in the second economy casts doubt on a blanket policy for the economy. Finally, the results suggest that the real total economy is healthier than the gloomy picture painted by official statistics.

Keywords: Second economy; trends, Zimbabwe JEL classification: C22, E01