Bleak outlook for Zim | Business Times

LIVINGSTONE MARUFU AND CLOUDINE MATOLA

 

Business executives warned yesterday that the economic outlook is bleak, citing a number of already dire factors such as the anticipated El Nino, a plethora of new taxes, and a general lack of optimism regarding Zimbabwe’s economy.

They claim that the problems could lead to a decline in demand overall, the closure of numerous businesses and the expansion of the corporate graveyard, the loss of jobs, and a reduction in capacity utilisation.

It follows Minister of Finance, Economic Development, and Investment Promotion Mthuli Ncube’s forecast of 3.5% economic growth, but with risks to the downside, it is anticipated that things will get worse by 2024.

Joseph Mverecha, an economist and the Head of Business Strategy at AFC Commercial Bank, told Business Times that after the year’s increased volatility in currency and exchange rates, expectations for 2024 were for a budget that anchored currency stability as a crucial prerequisite for macroeconomic stability and a solid base for de-dollarisation.

“Instead, the proposed budget has the potential to stock inflationary pressures in the economy while at the same time, pushing the local currency beyond the precipice and tanking the economy towards deflation/stagflation,” Mverecha said.

He added: “The economy is experiencing a relentless currency drift with no sign of stability in the near term.

“As before, the widening parallel market premium is the main factor contributing to the ongoing price increases in the economy. Without exchange rate/currency stability, there is no case for durable inflation stability. Hence 2024  is likely to be a tough year.”

Oswell Binha, chairman of the CEO Roundtable, stated that both corporations and individuals would be  significantly impacted by the proposed 2024 budget.

“Zimbabwe’s economic environment is extremely volatile mainly for formal organised businesses, and this proposed budget is a sledge hammer to both the corporate and individual citizens. It has created panic and uncertainty, further dampening energy the economy had picked up soon after the clarification of the de-dollarisation roadmap by President Emmerson Mnangagwa, “  Binha said.

Additionally, he said that Ncube needs to reduce his spending to fit the capacity that is available, especially in light of the fact that public service inefficiencies are eating up a sizable portion of his budget, bureaucratic corruption, and the size of the government itself.

According to Binha, Ncube should devise strategies that draw funding for large-scale infrastructure projects rather than relying more on  recurrent expenditure.

Kurai Matsheza, president of Confederation of Zimbabwe Industries, stated that a number of economic obstacles will prevent the country from achieving the predicted 3.5% GDP growth.

“If you can judge by the current temperatures, this points to a very  difficult agriculture season. And every time we have these episodes of the El nino affect,  the economy will also take a dive so certainly the projection of 3.5% may not be realistic and will not be achieved, “ Matsheza said.

The industry, he continued, is hoping that the government will rescind some of the harsh taxes it imposed in the national budget for 2024.

 

 

 

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