Zimbabwe’s GDP is projected to contract by 8.5% this year due to shocks
created by the coronavirus pandemic but will record modest recoveries in
2021, the African Development Bank has said.
The coronavirus pandemic, also referred to as Covid-19 has worsened Zimbabwe’s economic situation which is also grappling with forex and fuel shortages.
In the African Economic Outlook 2020 supplement report, AfDB said production in mining and agriculture is projected to go down this year due to Covid-19.
The two were projected to anchor recovery with real GDP was expected to reach 4.6% in 2020 and 5.6% in 2021 on the back of corrective measures to stabilise foreign exchange supply and avoid excessive money creation.
It said reductions in tourism earnings will exacerbate foreign exchange shortages.
“As a result, the economy is projected in 2020 to contract by between 7.5%
if the pandemic subsides by July (baseline) and 8.5% if it continues through
December (worst case), with modest recoveries in 2021.
The fiscal deficit is expected to remain above 5% due to the negative effects of the tax relief measures and weak business activity,” AfDB said.
It said the deterioration of the trade balance and secondary income account will push the current account to a deficit territory of 2% GDP in 2020
(baseline) which could widen further to 2.7% (worst case), wiping out a surplus of 1.1% posted in 2019.
But the bank said Zimbabwe can emerge from the current health and
economic crisis strongly on the back of vast natural resources and a skilled labour force.
“The country’s vast natural resources, public infrastructure still in relatively good condition, and a skilled labour force gives the country an opportunity to join supply chains in Africa and increase trade within the context of the African Continental Free Trade Area.
Coupled with policy responses to restore stability in the foreign exchange
market and control inflation, the economy could modestly recover in 2021,”
As of Tuesday, Zimbabwe had 787 confirmed cases of Covid-19. It had
201 recovered cases and 9 deaths