By Kudzai Kuwaza
The outlook for the Zimbabwean consumer remains challenging, over the short term (2019-2020), with the economic collapse brought by a currency crisis leading to hyperinflation and widespread shortages of foreign currency and fuel intensifying, a new report has revealed.
The report comes at a time the country is in a major recession characterised by foreign currency shortages, a debilitating liquidity crunch, power shortages and low productivity.
In its July 2019 report, British think-tank Fitch Solutions forecasts that the economy will continue to decline in the short term.
“Zimbabwe’s economy will continue to struggle over the coming quarters, with much-needed reforms not materialising, after the departure of long-standing president, Robert Mugabe, in 2017. The economy is forecast to grow only 2,2% year-on-year over 2019, but social instability continues to threaten this projection,” the report says.
Finance minister Mthuli Ncube has since revised the growth rate to below -2%.
“Owing to negative natural conditions, which badly affected a number of sectors, particularly agriculture and power generation, coupled with inflationary pressures, foreign currency shortages and limited external financial support, the economy has faced major drawbacks to growth stimulation in the first half of 2019,” Ncube said.
“In view of the headwinds, the revised 2019 GDP growth is expected to be negative and even below the -2% projected under the SMP (Staff-Monitored Programme).”
In the period under review, the underlying factor behind the accelerating inflation remains the country’s complex and unsustainable currency regime, says Fitch.
“Shortages of US dollars have led to a sharp fall in the value of bond notes and electronic dollars on the parallel market,” the report says. On the think-tank’s Southern African Risk Index, Zimbabwe scored a paltry 29,6 points out of a possible score of 100 on the economic front in the short term and 29,4 in the long term.
On the political index, Zimbabwe 45,4 out of a possible 100 in the short term and 44,7 in the long term.