eBusiness Weekly
Business Writer
The International Monetary Fund (IMF) predicts the Zimbabwean economy will shrink 10,4 percent in 2020, before registering a 4,2 percent recovery next year.
The projection that was made in its June Economic Outlook Report, is worse than the 7,4 percent contraction the world body had forecast back in April this year.
The IMF projection is worse than the 10 percent contraction forecast by another global lender the World Bank.
If the projection comes true, it will be the country’s worst economic performance in 17 years.
In 2003, Zimbabwe’s economy contracted by 17,2 percent on the back of decline as a result of many factors among them land reform programme.
Finance and Economic Development Minister Mthuli Ncube, is yet to announce revised growth projections for 2020, but indications are that the economic outturn will be dire.
Following the outbreak of the coronavirus pandemic, the Zimbabwe economy could not have performed better than its regional counterparts.
According to the IMF, the sub-Saharan African outlook for 2020–21 is considerably worse than expected in April and subject to much uncertainty.
Economic activity this year is now projected to contract by some 3,2 percent, markedly worse than the 1,6 percent contraction anticipated in April, reads part of the Regional Economic Outlook June 2020 update released this week.
“Across country groupings, growth is expected to fall the most in tourism-dependent and resource-intensive countries.”
Zimbabwe has already projected a serious tourism sector downturn. The country was expecting to earn as much as US$1,4 billion from tourism in 2020, but Tourism and Hospitality Industry Minister Nqobizitha Mangaliso Ndlovu has projected a US$1,1 billion shortfall in the worst case scenario.
While the IMF suggested that regional policies should remain focused on safeguarding public health, supporting people and businesses hardest hit by the crisis, and facilitating the recovery, Zimbabwe would be hard pressed given its budget constraints.
While domestic containment measures were necessary to limit infection and save lives, they entailed unduly larger costs on the poorest tranches of the population, whose livelihoods were upended, leading to increased poverty and food insecurity.
The global lender suggests that once the crisis has waned, countries within the region should put their fiscal position on a path consistent with debt sustainability and resume structural reforms.
“Thus, eventually, measures to raise revenue, rationalise spending, including subsidies, will help create space for public investment in education and essential infrastructure — including digitalisation — that can promote a green, job-rich, and sustainable growth.
“Moreover, authorities should refocus on a strategic reform agenda that promotes greater, sustainable, and inclusive growth.”
