3 January 2014

Zimbabwe: Economic Outlook for 2014 Remains Gloomy

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"In fact, there could be shrinkage and prospects of paying civil servants will be gloomy," he said.

Robertson would not be drawn to give his own growth projections.

In a bullish scenario the Zimbabwean economy will grow by 2,9% in 2014, and 1,3% in a bearish one, Econometre Global Capital researcher Takunda Mugaga said.

Mugaga said a US$4,1 billion budget does not have the capacity to drive a 6,1 % economic growth given the current state of the country's capital account and a balance of payment that is further deteriorating.

"No substantive approach will be in place for tackling the country's US$7 billion external debt," Mugaga said.

He said prospects of automating the Zimbabwe Stock Exchange (ZSE) by end of 2014 are very remote given the challenges that have delayed the process over the years. No new listing is expected on the local bourse.

The Econometre researcher said two or three indigenisation deals might accrue due to certainty from the last budget in forging ahead with the exercise, but politicians may highjack the process and destroy possible benefits.

Economist Brains Muchemwa said economic prospects for 2014 remained uninspiring as the economy would likely be characterised by rising corporate bankruptcies, increasing unemployment levels and tight liquidity conditions that will dent hopes of reasonable growth above 3%.

He said the existing multiple currency regime would continue to render both fiscal and money policies blunt instruments to directly stimulate the economy.

"In the absence of these two very important interventionist policies, it is reasonable and indeed wise to conclude that the current auto-pilot mode that the economy is in will persist for some time," Muchemwa said.

Commercial Farmers' Union president Charles Taffs said government's projected 9% growth for agriculture in 2014 is unattainable largely due to unavailability of finance for farmers.

In an interview with our sister publication Southern Eye, Taffs said the projections were too ambitious and at most the sector could achieve 1% growth driven by the anticipated increase in tobacco production.

"To achieve the target, agriculture funding must be on the right footing, banks should first reignite funding of the sector and then we can even achieve 10% growth," Taffs said.

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