Road to economic recovery will be long
DESPITE the likelihood of a decent rebound in productive sectors including agriculture, Zimbabwe is seen failing to return to pre-pandemic levels until early 2023 with increased unemployment, weak domestic demand and Covid-19 effects curtailing the recovery pace.
The government projected an ambitious 7.4% economic growth rate for 2021. However, last week the World Bank issued a 2.9% growth forecast for the country.
Economic analysts say the informal sector, which constitutes the largest piece of the economic pie, is going to be highly affected by lockdowns which, in turn, erodhousing power and resultantly reduces household consumption.
The weakened domestic demand will also affect capacity utilisation as well as production while the lower expected future income is also likely to affect other areas such as investment.
Government has decreed a 30-day Covid-19 lockdown on the back of rising infection but has been castigated for failing to spell out a concrete plan on vaccine procurement.
An economic analyst, Clemence Machadu, told The NewsHawks that the Covid-19 pandemic is likely to affect the socio-economic spectrum more than it did last year, if no concrete and decisive measures are taken.
“We recorded nearly 2 000 new cases during the first four days of the year, which are equal to cases recorded during the first five months of last year from the outbreak of the virus; and if the cases maintain this average trend, we can surpass the whole 13 867 cases of 2020 before the end of January. So, if left unaddressed, it may result in reallocation of budget expenditure towards Covid-19 management or increase of expenditure financed by borrowing,” he said.
“The challenge with our case is there seems to be no concrete rollout plan of the Covid-19 vaccine and there was no mention of allocation of funds for vaccine procurement in the 2021 national budget, which brings uncertainty on inoculation and the prospects of the vaccine returning us back to normality at earliest possible time.”
The country is now seen recording sluggish growth in every sector, with negative growth in the tourism sector.
Another independent economic analyst, Joe Chirowodza, said like last year the tourism sector is going to be the hardest hit by the pandemic, reversing the gains of the lifting of lockdown restrictions in the past.
This is expected to significantly reduce the foreign currency receipts for the country as sector traditionally contributes over 10% of the country’s gross domestic product.
“Tourist arrivals will continue to be low across the country. In most countries, there are border restrictions in terms of foreign arrivals. For Zimbabwe, I hear there is promotion of local tourism but that still won’t work due to low disposable incomes worsened by lockdown restrictions. So, I believe we will have a negative growth in this sector without giving percentages. Overally we are going to witness sluggish growth in most sectors and high retrenchment levels,” Chirowodza said.
“Companies have been managing to work with a minimum number of people. They will now realise the work can still be done without some other people. Increase in number of retrenchments will actually spill into the informal sector due to restriction of movement as the employers realise they cannot cope with keeping the people anymore.”