Mthuli Ncube sticks to 7,4% growth

GOVERNMENT remains bullish about a positive economic performance in 2021 where it has projected a 7,4% gross domestic product (GDP) growth despite the negative effects of the Covid-19 pandemic, according to Finance minister Mthuli Ncube.

Ncube says there were many positives for industry stemming from the pandemic whose effects are feared may trigger further economic turbulence.

The Treasury boss projects sharp surges in demand for domestic products as consumers substitute imports while health and information communication technologies are also projected to boom.

Although Ncube said it was too early to make an informed assessment of the impact of the lockdown, he said the government remained bullish about growth.

"We will make a better assessment in the next few months," Ncube said in an interview on an online news platform this week.

"It's too early to say, but we still remain bullish, we remain positive about recovery. Remember we are coming from a low base; we have had two years of negative economic growth in 2019 and 2020. This is basically a recovery story. We still feel the economy is on the up, and also the economy is still open, it's still operating in terms of the lockdown we have put as government," Ncube added.

He said small-to-medium enterprises, the tourism industry and restaurants had been hit hardest.

"Even with all of that we think that the economy is on the upside, there is recovery and we take a cue from what happened in the second half of the year (2020). After the lockdown of last year, you see the economy continued to perform even during the lockdown," Ncube said.

Because of import substitution, manufacturers recorded growth in volumes in the past year, Ncube said.

The Covid-19 pandemic has cost Zimbabwe dearly, he said.

Last year, the government spent ZWL$25billion in allowances and personal protective clothing for frontline workers.

Ncube attributes a loss of 2,5% in potential GDP growth to Covid-19.

The donor community, he said, pledged US$200 million last year, in support for Zimbabwe.

But less than half of that has been disbursed through United Nations agencies and other implementing partners.

Currently, a US$100 has been set aside in the 2021 budget to procure Covid-19 vaccines for at least 60% of the population.

He said more resources could be availed from the budget to vaccinate two thirds of the population.

Ncube said the country was in discussions with China, Russia, India and Covax for vaccines.

But last week, leading economists told our sister title, The Standard, that there could be a complete dislocation of the fragile economy, with the Zimbabwe National Chamber of Commerce (ZNCC) projecting GDP to plummet by 12% as Covid-19 paralyses production.

Almost all informal economy players, making up about 60% of GDP, were forced to ground operations following lockdowns announced in January.

"The situation is bad," ZNCC chief executive Christopher Mugaga told business digest. "What is needed is guidance for stability not for growth. When you consider that 62% of the economy is in the services sector then you can see how bad the situation is. The Ministry of Industry and Commerce has issued essential services letters to only 1 200 companies countrywide, which shows you the impact of the pandemic and the lockdown. We are in a quandary and we expect GDP to decline by between 8% and 12%," Mugaga said.