2020 Economic Prospects Paints Gloomy Picture
The realization of yet another lean rainfall season compounded by intermittent power cuts is likely to upset economic growth prospects for the year 2020, economic analysts have warned.
The economy contracted by 6 percent in the previous year on account of lower agriculture yield, dwindling mining and manufacturing output and electricity and fuel shortages yet the New Year begins with pretty much the same challenges worsened by an impending drought.
Authorities have projected a 3 percent growth in GDP in 2020 premised on a favorable rainfall-fed agricultural performance, a target likely to be missed and authorities may have to revise it downwards.
About 4 million Zimbabweans will be in need of food aid, the World Food Program says.
“The quickest thing that comes into mind is the revision of growth targets for the year. Developments on the agricultural side are indicating otherwise, we are likely to receive lower than anticipated rainfall and most of the produce now is deemed right-off in most parts of the country,” economic analyst, Pepukai Chivore told 263Chat Business.
“GDP forecast of 3% for 2020 is highly likely to be missed. This growth was anchored on agriculture which was expected to rebound to 5% from -16.3%. Agriculture is expected to register another negative growth on the backdrop of a looming drought. Tobacco output is also expected to decline due to debt and unimpressive retention thresholds,” he added.
The mining sector, a key foreign currency earner for the country- is also having its fair share of problems which are likely to affect production, particularly the artisanal miners who contribute the bulk of gold deliveries.
Power cuts are likely to continue hampering production in the sector with delays in foreign currency allocation to miners also posing threats to timeous operations.
The machete-wielding Mashurugwis are posing serious problems in most mining settlements and this is expected to take a huge toll on the sub-sector if authorities don’t intervene.
“Mining is expected to be below the projected 4.7 percent due to intermittent power cuts, fluctuating international commodity prices and disturbances currently occurring in the Artisanal Mining Sector after Mashurugwi killed a policeman and Police have declared war on amakorokoza. Remember, amakorokoza had overtaken Primary Gold producers in gold supply to Fidelity,” Chivore noted.
External factors will also have a massive bearing for the extractives sector cognizant of the slowdown in the Chinese economy which is the biggest consumer of industrial steel and platinum.
However on the positive side, the year opens with the local currency in somewhat stabilized mode, with the Zimbabwe dollar steadily oscillating between at ZWL$ 16- 17 against the USD on the inter-bank market.
Analysts have commended the stabilization of the currency as a welcome development in keeping inflation in check.
Most companies are expected to open the year on healthy balance sheets following substantial profits gain previous year on account of inflationary adjustments while positive sentiment is expected in the tourism sector riding on a better political climate in 2020 .
“The Tourism Sector is expected to register positive growth and over 2 million arrivals are expected. Signals coming from Thabo Mbeki led political talks are also expected to restore confidence in the destination Zimbabwe. Inflationary profits are also likely to push services sector,” Chivore said.
However, the economic climate remains volatile with the market re-dollarizing despite the ban on use of foreign currency.
This has led to the three-tier pricing model which is exerting inflationary pressures on the economy.
Solid measures will have to be taken to bring sanity in the economy