Source: ‘Economy to contract 3 percent’ | The Herald August 5, 2019
The Zimbabwean economy will contract by 3 percent in 2019, but the mining sector as well as the tourism sector will surprise on the upside, Finance and Economic Development Minister Mthuli Ncube has said.
The downward revision of economic growth expectations come on the back of a poor agriculture season that was hit by drought and Cyclone Idai in some parts of the country.
The negative growth in agriculture is expected to be at least 15.8 percent in view of unfavourable 2018/19 weather conditions, exacerbated by the occurrence of Cyclone Idai, which destroyed crops, livestock, agricultural and other critical infrastructure in some parts of the country.
Last week in his 2019 Mid-Term Budget Review Statement, Minister Ncube said: “Owing to negative natural conditions, which badly affected a number of sectors particularly agriculture and power generation, coupled with inflationary pressures, foreign currency shortages and limited external financial support, the economy has faced major drawbacks to growth stimulation in the first half of 2019.
“In view of the headwinds, the revised 2019 GDP growth is expected to be negative and even below the -2 percent projected under the SMP.
“Treasury will, therefore, keep tracking key developments in the economy with a view of making appropriate adjustments to sectoral growth profiles,” he said then.
But speaking at a breakfast meeting to review the 2019 Mid-Term Budget Review Statement, Minister Ncube revealed the extent of the negative GDP growth as a minus 3 percent.
“I did not tell you the figure during my budget presentation, but it’s going to be minus 3 percent,” said Minister Ncube.
“But I must say this, I expect two sectors to surprise us on the upside. They are mining, and tourism.
“The tourism sector is known as a low hanging fruit; if you go into Victoria Falls the hotels are full, we need more hotels. It’s a fantastic sector.”
However, the mining sector, gold mining in particular, has been struggling in the first half of the year although Zimbabwe was running a current account balance in the first three months.
But Minister Ncube still has hope that the sector will come right given initiatives Government has been taking to stimulate production.
“The mining sector, the Government is doing a lot in driving that sector,” said Minister Ncube adding that together with the tourism sector “will surprise us on the upside, but naturally the agriculture sector is down.”
He, however, said the issue of food security is key and Government has set aside an additional $1,6 billion for that sector.
“We are also preparing for the next season the 2019/2020 summer cropping season, so we again we have programmes around that.”
He said the Presidential Input Scheme as well as Command Agriculture will be in place for the upcoming season. He, however ,said farmers who benefit under Command Agriculture “have to pay back”.
“We will ensure that only those who can payback will be targeted. We have a track record and we know who has been a good customer and we will target those farmers,” said Minister Ncube.