The Insider - Zimbabwe 2010 forecast: Economy key for survival of inclusive government (with comment)

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The Insider - January 2010

Zimbabwe 2010 forecast: Economy key for survival of inclusive government (with comment)

The economy will be key to the survival of Zimbabwe's inclusive government this year. Prime Minister Morgan Tsvangirai said the government should now move from economic stabilisation to growth. Zimbabweans had already demonstrated that they were more interested in economic growth than democratisation or the elections according to Tsvangirai's own official website.

The government is aiming for a 7 percent growth in gross domestic product according to this year's budget. The major drivers of economic growth will be agriculture, mining, manufacturing and tourism.

The inclusive government has already managed to address inflation- the country's worst enemy. It plunged from 231 million percent in July 2008- the last time the government released annual inflation figures to about 6 percent for 2009. It is expected to drop to 5.1 percent this year before rising to 7.7 percent next year.

Though the country's agriculture is reported to be in a mess it remains the backbone of the country's economy. The government is now aiming for a growth of 20 percent a year up from a decline of 36 percent in 2008.

Already there are plans to increase maize production from 1.2 million tonnes in 2009. Tobacco is expected to increase from 56.5 million kgs to 75 million kgs this year. Increases are also expected in wheat, sugar and cotton.

Mining is likely to be the engine driver of the economy as all the gold mines are now back in production. Gold went up by nearly one tonne from 3.1 tonnes in 2008. It is expected to increase to 6.4 tonnes in 2010.

Chrome production is expected to more than double from 242 590 tonnes last year to 500 000 tonnes this year. There will be a marginal increase in platinum. Mining is overall expected to grow by 40percent this year with gold accounting for nearly 25 percent of the growth.

Tourism has started doing well following the lifting of travel restrictions by most western countries including the United Kingdom and the United States. Arrivals were up by nearly 3 percent in the first half of 2009. This should be boosted by the soccer World Cup in neighbouring South Africa this year. Tourism is expected to grow by 10 percent up from 6.5 percent last year.

The biggest hope for growth is the manufacturing sector. It was expected to grow by 10.5 percent in 2009 following a decline of nearly 30 percent in 2008. Capacity utilisation was down to 10 percent but is now on average over 30 percent.

Production in the drinks and tobacco sector is now nearly 80 percent. Manufacturing has been boosted by an increase in deposits into banks. The deposits increased from $200 million in February to over $1 billion in October allowing banks to lend $480 million to the productive sector.

But as Finance Minister Tendai Biti said in his budget speech, Zimbabwe's economic recovery will largely depend on the attitude of Zimbabweans themselves. They must have a unified national vision.

As God loving people, Biti went on, Zimbabweans must always remember that the Lord was on their side. He had plans for Zimbabwe, plans to prosper and not to harm the nation, plans to give the country hope and a future.

Will SA be happy?

Nobody I know has any serious doubts that the Zimbawean economy will bounce back quickly once it has its political problems under control. Your article "Zimbabwe 2010 forecast: Economy key for survival of inclusive government" shows really impressive growth in such a short time.

From my side, it brings up some concern, seeing that there are now a number of Southern African countries beginning to threaten South Africa's economic hegemony in the region, especially should Zimbaweans return home to contribute to their own economy rather than that of South Africa.

It will be important to monitor political relations as well over the next few key years, in order to ensure that Zimbabwe can reach its full potential. Longstanding strained relations between South Africa and Angola is some indication that South Africa is wary of neighbours that show potential to get too strong.

Leon Kukkuk- Angola

Posted- 20 January 2010

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