Economy to contract 4.5%, rebound in 2021 – Finance Minister

Harare, (New Ziana) – Zimbabwe’s economy will contract by 4.5 percent in 2020, down from the earlier predicted three percent growth, mainly choked by the Covid-19 pandemic, Finance and Economic Development Minister, Mthuli Ncube said on Thursday.

The contraction is despite the fact that the country will once again
end the year with a positive current account balance.

Presenting the mid-term review statement, Ncube opted not to present a
supplementary budget, saying ministries had to date only utilised
about 46 percent of their 2020 budget allocations.

He said the economy could have contracted by a higher figure had it
not been for government intervention and support from development
partners.

Besides Covid-19, which is slowly peaking in the country with over 1
000 infections and 20 deaths to date, Zimbabwe’s economy was already
grappling with effects of a devastating drought.

“A combination of government intervention and external development Support in mitigation of the Covid-19 pandemic is expected to alleviate deeper contraction of the economy to a projected -4.5 percent in 2020, against the initial Budget projection of three percent growth,” Ncube told legislators in Parliament.

“In the absence of the above stimulus package and assuming prolonged
and severe impact of the crisis, the economy would contract severely.”
Government provided over ZW$20 billion to various sectors of the
economy hit by the coronavirus, for working capital purposes.

Multilateral institutions such as the African Development Bank have
projected that Zimbabwe’s economic performance will dip by more than
six percent this year.

Economic performance had specifically been weighed down by output
losses in mining, manufacturing and agriculture, with exports impacted
by Covid-19.

“Prices of most minerals (nickel, copper, chrome, coal and cotton)
except for gold and rhodium have weakened since the pandemic was first
reported amid weaker global demand. Gold has, however, benefitted from
safe haven demand,” Ncube said.

The economy would rebound, with a 7.4 GDP growth in 2021 on the back
of strategies that government is putting in place.

Ncube said the country will record a current account surplus of US$1.2
billion, up from US$900 million last year.

“The anticipated surplus is also on account of measures on containing
non-essential consumptive imports,” he said.

Ncube said in terms of revenue collection government, had to date
collected ZW$34 billion against the annual target of ZW$58.6 billion.
New Ziana