Our model is predicting that inflation will continue to rise and reach a high point of 610.00% in April 2020. The rationale for this assertion is that in early March 2020 the currency depreciated by 17.00%, the Postal and Telecommunications Authority approved an increase of 57.00% in voice, data and sms tariffs, and banks increased charges between 140.00% and 900.00% depending on the type of service.
Predicting or modelling future inflation is almost impossible until additional data is released however, we are confident that our year-end inflation projection of 325.00% will be closer than the government’s pipe dream of 50.00%.
An additional difficulty is attempting to forecast growth for 2020. The Government has a pipe dream forecast of 3.0% growth for 2020. In February 2020, prior to the full impact of the Corona virus being known, the IMF predicated 0.8%. Our model is predicting negative growth for the year; (1.50) % for 2020. Irrespective of the divergent forecasts, one can safely conclude that business conditions in the country are dire and any salary increase will therefore place an additional burden on firms’ margins and concomitantly, profitability and survival prospects.
The counter argument to this is that employees have experienced a significant (if not devastating) erosion of their disposal income and most are struggling to make ends meet.
Our recommendation for 2020 salary increases is presented in the format of a matrix: