- Sustained economic recession forecasted
- Poverty levels seen escalating to half of total population
Harare – Grappling with an adverse economic situation characterized by acute foreign currency and fuel shortages, blight power outages and a devastating local currency that is fast devaluating by over 90%, Zimbabwe is clutching on the straws with economic demise glaringly staring in its face.
These factors have been further compounded by the global coronavirus pandemic which has halted economies and shaving substantial economic value along the Lockdown.
As at February, the food poverty line for one person and an average household increased by 4% to 5% to $419 and $2 097 respectively.
Unlike other financial crises, the coronavirus requires a rather strange response that inevitably impedes economic growth and has serious consequences on poverty reduction.
The pandemic has necessitated a huge cut of the global economy and Sub-Sahara is expected to slump into recession after 25 years. Sub-Saharan economy is projected to shrink by 1.6%. Zimbabwe belongs in this region.
One of the bilateral lenders, the International Monetary Fund (IMF) has coined this recession the Great Lockdown because unlike other crises inclusive of the 2008-09 financial crisis and the Great Depression that needed stimulating economic activity, the Great Lockdown requires businesses to adapt to containment measures that inadvertently bring economic activity to a halt.
The Great Lockdown is occurring in a more globalised world hence the ripple effects are quite high.
Zimbabwe is a low income fragile economy likely to experience very low capitalisation in almost every industry that supports the economy, the economy that had already nosedived into stagflation.
The IMF has recently revised GDP growth for Zimbabwe to -7.4% in 2020 on the impact of COVID-19 from a previous forecast of 0.8% growth.
The coronavirus has made people adapt to new ways of doing business, shopping and living and there is a high chance it will be hard to transfuse to the traditional way of doing things.
This is a different case for Zimbabwe, adaptation will remain low. Ever since the enactment of a lockdown by the President as means to combat the spread of the virus, people are still doing what they can so as to earn a living. Some might deem this as reluctance to oblige to the security measures but people need to feed themselves.
Life is going to get tougher, harder and more painful as this virus has resulted in some employees being given forced leave, some are being retrenched and some are not even earning anything as businesses are not operating.
Also, the exchange rate continues to depreciate, further weakening the local currency.
Zimbabweans can only anticipate the worst from the effects of this virus.
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