Household consumption down 12 percent in 2016

Source: Household consumption down 12 percent in 2016 | The Financial Gazette July 27, 2017

HOUSEHOLD spending declined 11,8 percent in 2016 on the back of lower disposable incomes, leading to sluggish growth, Finance and Economic Development Minister Patrick Chinamasa said on Thursday.

The economy grew by a marginal 0,7 percent last year, against a projected 2,7 percent, due to the effects of a bad 2015/16 season for agriculture, an anchor sector.

“Household consumption, down by 11,8 percent, also contributed to the constrained growth on account of low disposable incomes and poor export performance,” Chinamasa said while presenting his budget review in Parliament.

Household spending is an important component of aggregate demand and impacts overall economic growth. Zimbabwe’s high levels of unemployment, with accelerated company closures and job losses between 2015 and 2016, have seen household consumption weakening.

Consumption is, however, expected to rise following a rebound in agriculture, driven by exceptional rains and increased government spending on farm inputs.

Agriculture is expected to register 22 percent growth in 2017, driving overall economic expansion to a forecast 3,7 percent.

Consumer-facing businesses such as beverage maker Delta Corporation, OK Zimbabwe, the country’s largest supermarket group, and the biggest telecommunications firm Econet have all seen sales coming off peaks registered between 2012 and 2013 due to weakening consumer demand.