World Bank gloomy on Zim economic growth

via The Zimbabwean | Zimbabwe News. 17June 2014

World Bank gloomy on Zim economic growth

Government is losing the war to revive the economy, whose growth the World Bank (WB) says will slow down even further this year.

 
The WB, in its latest Global Economic Prospects report, revised Zimbabwe’s economic growth for 2014 downwards from close to 4 percent to 2 percent, forecasting a further slide to 1 percent in 2015.

The international financial institution projected that economic growth would subsequently sink to 0.6 percent, warning of the possible danger of the growth rate turning negative in 2017 if no meaningful reforms are carried out to attract general investment.

While the economy shifted from hyperinflation to relative stability following the establishment of a Government of National Unity (GNU) in early 2009 and the adoption of a multi-currency regime, it deteriorated at the expiry of the coalition and last year’s general elections, won controversially by Zanu (PF).

Finance Minister Patrick Chinamasa has admitted that he does not have a clue how to fix the economy, adding that he does not know why it deteriorated in the post-election period.

Companies are closing down in their hundreds and unemployment is rising, crippling government efforts to raise revenue.

Government, in recent months, has had to shift pay dates for civil servants because of a liquidity crunch and is failing to fund critical public programmes.

It recently toned down on its indigenisation policy which forced foreign companies to surrender majority shareholding to black Zimbabweans, now preferring to adopt a sector specific approach.

However, investors have assumed a wait-and-see attitude, showing no eagerness to plough their capital into the ailing economy as yet.

Further, the country has moved from hyperinflation to deflation—a trend whereby there are too many goods and little money to purchase them with, thereby reflecting a slowdown in economic activity.

According to the Zimbabwe National Statistics Agency (Zimstat), the economic is into its fourth month of deflation, since February.

The agency put the year-on-year inflation for May 2014 at -0.19 percent, as reflected by the Consumer Price Index.

Businesses have suffered because of the deflation as their sales have generally gone down.

Meanwhile, Zimbabwe is saddled with huge international loans that it is failing to service.

It owes hundreds of millions to such institutions as the WB, the International Monetary Fund (IMF), African Development Bank (AfDB) and the European Investment Bank (EIB).

During a recent visit, EIB’s division chief for southern Africa and the Indian Ocean region, Deiderick Zambon, said Zimbabwe would not receive preferential treatment from the bank.

“We are a commercial bank and we don’t have a prerogative to forgive debts like our colleagues at the World Bank (WB) or the African Development Bank,” he said.

 

COMMENTS

WORDPRESS: 4
  • comment-avatar

    Very gloomy indeed. And no direction either. No-one trusts Zanu PF to honor its pledges or its policies or even the rule of law. This toxic atmosphere precludes any possibility of even starting to move in the correct direction.
    It will require many steps and many years of hard work, but the very first step must be the ending of Mr Mugabe’s woeful presidency.

  • comment-avatar
    zanupf fear me 6 years ago

    World bank merely being polite. They know growth is already minus – 7% and that Mugabe’s paradise is actually the worlds worst economy currently !!!????

  • comment-avatar
    Wilbert Mukori 6 years ago

    Mugabe knew that his reckless spending to win the 2013 elections at all cost risked bankrupting the already weak and frail national economy. But the thought giving up power was simply unthinkable for him and so he too that risk. When the national economy has been in intensive care unit from the minute he was declared the winner.

    He pulled off the vote rigging but rigging economic recovery has proven to be a bridge-too-far. He has tried to all his usual tricks but the begging bowl for the ZimAsset recovery plan has remained mockingly empty; not even his old ally China would contribute. His racist rhetoric and the real threat that he would allow his cronies to loot any foreign owned businesses – many of them have failed to make money from the looted white-owned farms and they are as poor as church mice and are therefore desperate for fresh loot – has scared away would be foreign investors.

    Without fresh financial injection the national economy is not coming out of the ICU. With nether the donors nor investors showing an interest there is no foreign money coming into Zimbabwe. The economy has only one way to go – continue with its nose-dive.

    What the people of Zimbabwe have to realise here is that Mugabe may admit the economy is in trouble but he will NEVER EVER give up power. It is not in the DNA of tyrants and dictators to give up political power. People will have to pressure him to give up power or he will drag the nation to the deepest recesses of hell and still hang on tenaciously to the reins of power regardless economic cost, the human misery and lost human lives.

  • comment-avatar

    The World Bank is forecasting a further slide to 1 percent in 2015.
    Does the World Bank think there will even be a Zimbabwe in 2015??