Business / Local
Zimbabwe has strong economic fundamentals, but..
15 Sep 2015 at 08:21hrs | Views
Most of South Africa's neighbouring countries are struggling to keep an economic pulse beating, but analysts believe that Mozambique and Zimbabwe could revive in coming years if the stars align.
Zimbabwe and Mozambique has been less dependent on what is happening in South Africa's economy.
Control Risks says that while Botswana and Namibia were generally the better governed countries, Zimbabwe and Mozambiqu had the most potential to grow into stronger economies, if they managed risks and overcame certain challenges.
Zimbabwe has strong economic fundamentals, even though it has been one of the worst-run countries in recent history.
Despite general bad decision-making, its economy has manged to remain similar in size to that of Botswana and Namibia. Zimbabwe has alarge population than the other two, with about 14.6 million people, and more diversified natural resource wealth.
Zimbabwe basically went through a 'lost' decade after 2000 when it experienced hyperinflation and recession, resulting in widespread poverty. By 2008 unemployment had reached 94%.
The country's flourishing agricultural sector was almost totally wiped out after forcible land redistribution of commercial farms took place from 2000 and 98% of its economy is dependent on government spending. Its labour market is highly regulated and other state regulation in the country is making it costly for business to operate.
While it is still the second worst economy in the world, it did show some recovery after it went over to the dollar system and, between 2009 and 2011, its GDP growth averaged 7.3%.
Since then, however, Zimbabwe's economic growth again slowed and is now 1.5%.
Barnaby Fletcher from Control Risks in London said the country was caught in the ongoing liquidity crisis and was now experiencing deflation. It would take economic reforms to change its fate, further prompted by the fact that it needs to attract foreign currency inflows.
"Yet reform efforts have rarely gone beyond rhetoric. The ruling Zanu-Pf has been weakened by infighting linked to the succession issue and this vulnerability has meant that populist considerations have taken priority over necessary reform," said Fletcher.
Nevertheless, the belief is that it could grow into one of the strongest of South Africa's neighbouring countries with the right leadership.
Zimbabwe and Mozambique has been less dependent on what is happening in South Africa's economy.
Control Risks says that while Botswana and Namibia were generally the better governed countries, Zimbabwe and Mozambiqu had the most potential to grow into stronger economies, if they managed risks and overcame certain challenges.
Zimbabwe has strong economic fundamentals, even though it has been one of the worst-run countries in recent history.
Despite general bad decision-making, its economy has manged to remain similar in size to that of Botswana and Namibia. Zimbabwe has alarge population than the other two, with about 14.6 million people, and more diversified natural resource wealth.
Zimbabwe basically went through a 'lost' decade after 2000 when it experienced hyperinflation and recession, resulting in widespread poverty. By 2008 unemployment had reached 94%.
While it is still the second worst economy in the world, it did show some recovery after it went over to the dollar system and, between 2009 and 2011, its GDP growth averaged 7.3%.
Since then, however, Zimbabwe's economic growth again slowed and is now 1.5%.
Barnaby Fletcher from Control Risks in London said the country was caught in the ongoing liquidity crisis and was now experiencing deflation. It would take economic reforms to change its fate, further prompted by the fact that it needs to attract foreign currency inflows.
"Yet reform efforts have rarely gone beyond rhetoric. The ruling Zanu-Pf has been weakened by infighting linked to the succession issue and this vulnerability has meant that populist considerations have taken priority over necessary reform," said Fletcher.
Nevertheless, the belief is that it could grow into one of the strongest of South Africa's neighbouring countries with the right leadership.
Source - Sunday Times
