March 21, 2002

Bleak economic future

Without a political settlement in Zimbabwe to win over the opposition and attract donor support, the country's economy could shrink by more than 12 percent this year, a leading analyst has told the UN’s Integrated Regional Information Network (IRIN).

An in-house report prepared for the government is believed to predict a 9,1 percent fall in gross domestic product (GDP) in 2002. But according to Tony Hawkins, director of the University of Zimbabwe's Graduate School of Management, the report does not factor in the impact of the country's drought. He estimates that GDP could contract by 12 to 12,5 percent. Zimbabwe's Financial Gazette on Thursday, March 21, quoted manufacturers as warning that the country faced rapid de-industrialisation in the coming months due to the anticipated exodus of investors and skilled personnel. Some companies are already operating a two to three-day working week. Last year, more than 400 firms closed down and 10,000 jobs were lost as the economy shrunk by more than 7,5 percent.

The two options facing the government are to "go it alone", or negotiate a political deal with the opposition in the wake of the country's contested presidential election, that could then win the support of major western donors. The report, prepared by a team of government advisers, "flatly says that going it alone is a non-starter", Hawkins said.

However at present, neither President Robert Mugabe or the opposition Movement for Democratic Change (MDC) - which accuses the government of rigging the 9-11 March presidential election - are even close to the idea of a rapprochement.

In the absence of a political deal, Zimbabwe faces "a pretty bleak picture", Hawkins said. The government has lost the support of the International Monetary Fund (IMF) over its inability to meet agreed benchmarks, and western donors have ceased programme aid. Their condemnation of the election has deepened Zimbabwe's international isolation.

The crunch period is expected to be August/September when the estimated four to five months' supply of maize from the current crop runs out. The government does not have the foreign exchange to import enough of the staple to cover the anticipated deficit. The country is already experiencing serious shortages and rising prices for maize meal, with 558.000 people currently in need of food aid.

An anticipated "significant" hike in fuel prices in coming weeks will add to the mounting woes of especially urban-based Zimbabweans, many of whom are "shell shocked" by the election result, Hawkins said. As the economy deteriorates, "there is a growing risk of civil unrest as the year wears on", he added. (IRIN)

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