Zim Economy to contract by 6pc: Finance Minister

Business Top Stories Zimbabwe

Ndaka Majaka

ZIMBABWE’S economy is seen contracting by at least 6,5 percent this year on the back of power challenges and the drought that is ravaging the country, Finance minister Mthuli Ncube has said.

In his 2020 pre-budget planning document Ncube said while the economy was anticipated to grow by 4,6 percent next year, this year’s growth fortunes were going to be in the negative.

This comes as Ncube had initially forecast a 3,1 percent growth for 2019 in his budget last year, which he then revised to a 2,1 percent contraction during a mid-term review on August 1.

“In 2019, severe exogenous shocks related to climate change caused drought and cyclone which compromised agriculture activities and electricity generation with extended effects on other sectors, – all forcing the economy into recession.

“The economy is, therefore, projected to underperform by as much as -3% to -6% in 2019,” Ncube said.

Zimbabwe is presently battling triple-digit inflation, an energy crisis that has seen fuel prices surge weekly while industry is being hemorrhaged by 16-hour load shedding.

On the other hand, workers are feeling the sting of shrinking disposable incomes.

To compound this, the country is also grappling with a foreign exchange shortage that has seen the local currency falling against the greenback.

However, Ncube said on a month-on-month basis, inflation was expected to ease to around 10 percent by close of year.

Meanwhile, the pre-budget planning document reveals that Government expected to double its wage bill from ZWL$5,56 billion to ZWL$11 billion in 2019.

It further states that exports in the first seven months of the year stood at US$2.1 billion, which was a seven percent improvement from the US$1.96 billion recorded during the same period in 2018.

Consequently, this resulted in a narrower trade deficit of US$679 million in the first seven months of 2019, from US$1,58 billion same period 2018.