Zim economy to shrink 7.4% in 2020- IMF

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  • IMF: Zimbabwe’s economy will shrink by -7.4% in 2020
  • Equity Axis  expects 2020 GDP to fall by between -8% to -12%
  • Sub Saharan Africa is expected to contract -1.6%

According to the latest World Economic Outlook report issued by the International Monetary Fund, Zimbabwe’s economy will shrink by -7.4% in 2020 on the impact of the pandemic. In an earlier issued forecast made before the full impact of COVID19 was apparent, IMF had forecast Zimbabwe to see a 0.8% GDP growth. Post COVID19, IMF projects 2.5% growth for 2021.

Even with just 3 weeks of no activity,  Equity Axis expects 2020 GDP to fall by -8% and up to -12% if the crisis stretches to mid-year.

Late last year, the International Monetary Fund (IMF) projected an economic contraction of  7,2% by the end of 2019, vis a vis government’s revised projection of up to -6%.

Zimbabwe’s economy is battered on every side with a weakening exchange rate as the local currency has plummeted more than 90% since February of 2019, soaring inflation which sky-rocketed beyond 600% in March 2020 to reach the highest in 11 years as greenback pegged pricing persists. This is compounded by waning confidence in the economy, failure to access international debt financing, shortage of basic commodities and a persisting fuel crisis.

Zimbabwe’s Production capacity is hovering below 40% with predictions it could dip to 27%, from 36% in 2019 all things being equal (i.e power cuts, fuel shortages). Compounded with the coronavirus hit, capacity utilization could fall below 20%.

According to the World Food Programme (WFP), as COVID-19 takes hold, the country’s already severe climate- and recession-induced hunger crisis is becoming even more profound.

“With most Zimbabweans already struggling to put food on the table, the COVID pandemic risks even wider and deeper desperation”, said Eddie Rowe, WFP’s Country Director.

According to latest data released by the Zimbabwe Statistical Agency (Zimstat), Zimbabwe’s Food Poverty Line (FPL) for one person in February 2020 was $419, a 4% increase from $401 in January while that for an average household of persons stood at $ 2 097, 5% up from $2004 in January.

In an official statement last week the United Nations cited Zimbabwe and South Sudan as being the most vulnerable countries to COVID19 on the continent. The UN expressed concern over Zimbabwe’s weak and contracting economy, food insecurity as a result of the drought and the cyclone compounded with a poor health system.

In the same report, Sub Saharan Africa is expected to contract -1.6% before rebounding to 4.1% in 2021. South Africa our largest export market, averaging 40% of our exports is currently reeling from the virus and is expected to contract -5.8% in 2020 and register a 4% growth in 2021. Northern neighbour Zambia is projected to contract by -3.5% in 2020 and bounce back 5.5% in 2021.

This is akin to World Bank’s Africa Pulse report issued last Thursday which projected: Gross domestic product in the region to shrink between -2.1% and -5.1% in 2020, compared with 2.4% growth last year, on account of large contractions in South Africa, Nigeria, and Angola, the three biggest economies.

In the WEO, the IMF said the global economy is expected to contract sharply by -3% in 2020 as a result of the pandemic, a contraction that is worse than the 2008-09 financial crisis.

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