Zimbabwe’s economy may recover next year, but only if its capital city Harare speeds up reforms to attract foreign investment, the African Development Bank said this week.
It predicted further contraction this year after sustained economic headwinds, but with a sense of optimism after moves for a political settlement brokered by former South African president Thabo Mbeki.
More Zimbabweans are food-insecure this year after the World Food Programme which has made a further appeal for US$200-million last month said that it intended to double the number of Zimbabweans it would assist to 4.1-million.
This leaves at least 3-million Zimbabweans without aid, prompting Catholic and other faith-based agencies to partly step in.
Apart from food insecurity, Zimbabwean companies and citizens in urban areas are battling electricity outages and fuel shortages.
Those in rural areas have been hit by shortages of water for domestic and farming purposes due to persistent drought conditions, painting a gloomy outlook for this year’s farming season and forcing many farmers to sell their animals.
It is against this backdrop that Walter Odero, Zimbabwe country economist at the African Development Bank, said this week that Zimbabwe’s economy would further contract this year.
“We are expecting a contraction of between 5% and 7% for Zimbabwe for 2020 because of challenges such as drought, the fuel crisis and foreign exchange issues. Industries require investment and we did not have investment in 2017, 2018 and 2019. Because most of the industries in Zimbabwe are agro-based, if agriculture is affected, we can’t expect growth. So I wouldn’t be surprised to see no growth,” Odero said.
This week, the World Bank said in its Global Economic Prospects 2020 report that the Zimbabwean economy contracted by 7.5% last year. It said the country suffered a sharp rise in inflation, which continued to “squeeze real incomes, resulting in a large contraction” in economic activity.
“Activity has been further constrained by persistent shortages of food, fuel, electricity, and foreign exchange,” said the World Bank.
However, the Bretton Woods institution forecasts the recovery of Zimbabwe’s economic growth to 2.7% this year.
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