The outlook for Zimbabwe’s economy is becoming bleaker, with the citizenry’s confidence levels plunging to harrowing depths, as price hikes, rising unemployment, dented sentiments.
The latest indicators show the wheels are coming off the economy with an expected barrage of adverse developments, mainly caused by the “austerities introduced by the Minister of Finance and Economic Development, Professor Mthuli Ncube, now further denting confidence, especially from consumers, workers and businesses, regarding Zimbabwe’s economic prospects.
The fall in confidence is particularly large for low income households amid an environment of weak demand and expected future price increases. The real disposable income or the purchasing power, has been eroded that many Zimbabweans are finding it difficult to have three decent meals on the table, worse still for those who are lucky to have a job, to get money to commute to their work places. True, consumers are feeling pressure from all angles, exacerbated by the substantial household debt burden, to finance children’s travel to schools and day to day functioning for children and the breadwinners themselves, has built up during the past few months. Apart from the bleak short-term outlook, unfortunately, the long-term, if President Emmerson Mnangagwa’s administration fail to fix the economy, the outlook for the Zimbabwe economy is similarly sombre.
In a difficult environment like what is obtaining today, supply disruptions have added substantially to the challenges facing local industriesmining, manufacturers and other sectors of the economy.
This week, Zimbabweans across several cities and towns, staged a three day-Monday to Wednesday- stay away, which saw companies closing. Some of the protesters turned violent and more often the violent had long tail, a move which resulted in some people losing their lives while several shops were looted and properties worth millions of dollars destroyed.
While it is difficult to quantify the impact of the damage -both direct and indirect -during the “strike season”, which relate not only to production foregone but also to spending that did not take place because of the closed period, some business organisations have estimated potential losses to the economy due to lost productivity and slower spending to be close to $100 million. Estimates from others even indicated that the extent of the damage inflicted on businesses and the economy was close to $150 million a day.
President Mnangagwa, last week announced a 151 percent increase in fuel prices for both petrol and diesel, a move which triggered protests across the country for three days from Monday to Wednesday this week. The price of petrol increased to $3,31 a litre from $1,32 a litre, while the price of diesel also went to $3,11 a litre from $1,24 a litre. Recently, government, introduced a punitive two percent tax on transactions, and triggered a sharp increase prices of basic commodities. Zimbabweans, have been enduring the pain. But, it was the sharp increase in prices of petrol and diesel, which prompted Zimbabweans to stage a three day stay away. All the price hikes are happening at a time when wages and salaries remain static. These moves are a sign of lies ahead in terms of jobs lost or jobs not created, something government should fix. What this means is that investors, will be reluctant to take their chances into the local economy. Analysts said while workers are free to withhold their labour, investors are also free to withdraw their capital.