Economic growth unlikely: Robertson

via Economic growth unlikely: Robertson | The Zimbabwean by Farai Mabeza 25.09.13

The key economic sectors of agriculture, manufacturing and mining will struggle to spur the country’s economic growth prospects, says economist John Robertson.

He told The Zimbabwean that government’s revised projected growth rate of 3.4 percent was unlikely to be realised.

“We will be lucky to register one percent economic growth. In manufacturing companies are closing right now and people are losing jobs. The companies are declaring bankruptcy to avoid retrenchment costs they cannot afford,” he said, in an exclusive interview.

According to its Mid Term Fiscal Policy Review, the government has already revised Gross Domestic Product growth targets for 2013 downwards from 5 percent to 3.4 percent. Robertson feels this is still too high.

Agriculture is yet to recover fully, apart from tobacco which appears to be on the rebound. “It doesn’t look good for agriculture. We will need to import wheat. Barley is looking better and tobacco will probably be all right. Sugar won’t be too bad,” said the economist.

But farmers need improved access to inputs. “There is a problem with inputs. Only seed is available but government still owes on last year’s seed,” he said.

On the mining sector, Robertson said the industry risked fluctuations in global prices and high royalties, making it vulnerable to external factors. Gold and platinum were particularly affected, which meant the sector was unlikely to deliver any substantial growth to the economy.

For the first five months of the year, according to the policy review, mining produced a mixed bag of results. Gold, coal and nickel production either remained constant or went down compared to the previous year. But platinum continued its strong growth path.

However, Robertson predicted positive results for other sectors, notably tourism. Tourist arrivals were up 7.4 percent year on year for the first five months.

“In retail people’s purchasing power is still very weak but companies such as Edgars and Truworths have survived and done reasonably well,” he said. Although OK Zimbabwe did well, the situation at Meikles was worrying, as evidenced by reports of staff lay-offs.

The fiscal policy review showed that the manufacturing sector registered bigger capacity utilisation levels in the food and beverages sub sector, but was crippled by infrastructural issues.

The Balance of Payments economic indicator showed a negative trend, while the trade deficit for 2013 was projected as being close to $3 billion against an estimated $2.6 billion for 2012.

Although the use of the multi-currency system has stabilised inflation, foreign direct investment inflows remains dangerously low. A weak South African Rand and lower aggregate demand also contributed to the lowering of the inflation rate, said Robertson.