The economy is now on a path to recovery, Finance Minister Prof Mthuli Ncube has said.
Prof Ncube was speaking to the state media when he said:
“The economy is now on a path to recovery. The worst is over and Government is now working on ensuring the economy recovers strongly, taking advantage of the milestones from the TSP, and supportive measures as enunciated in the NDS1.”
He continued saying:
“Our key priority will be to nurture the stable macro-economic environment currently prevailing in the country by continuing to implement prudent fiscal and monetary policies.
“Furthermore, the Government will bring forward business and infrastructure investment activity and adequately prepare and support the productive sectors, in a manner that does not promote vulnerabilities and instability.”
Prof Ncube said Covid-19 remains a serious challenge to Zimbabwe and the world at large, particularly in light of “most worrying” emergence of new variants of the virus, which spread faster and are potentially more deadly.
He said Zimbabwe draws encouragement from the fact that the world is now rolling out vaccines and Harare is taking delivery of its first batch of vaccines from China today.
The manufacturing capacity of the vaccine remains constrained to meet the huge demand and distribution has largely favoured developed countries. You may also note that the distribution mechanisms of the vaccine are also a challenge as some require strict refrigeration all the time.
“It is our hope that as the production lines are expanded, Africa and other developing countries will easily access them. Having said that, the pandemic is indeed causing a risk to the economy, threatening realisation of our projections for the year 2021.
“However, you may be aware the economy has contracted for the past two consecutive years, putting it on a very low base hence giving room for recovery.
“You may also note that drought was one of the major drivers of the recession during the past two years as agriculture activities and electricity generation was compromised. However, the season to date has been quite positive, and is promising to be a better season that presents an opportunity for a strong rebound of the economy.”
Prof Ncube projected in the 2021 National Budget that the domestic economy was largely expected to rebound and register growth of 7,4 percent this year.
The African Development Bank has projected a 5,6 percent economic growth this year driven by recovery in the agriculture, mining, and tourism sectors, together with increased public and private investments.
Prof Ncube said considering that the Government did not impose a blanket ban on all economic activities in the Covid-19 containment measures, with productive sectors such as mining, agriculture and manufacturing, allowed to continue operating, that should be positive for economic growth.
As the country brings under control the obtaining second wave of Covid-19 in the shortest possible time, which is already happening due to declining new infections and deaths, economic activity will recover.
“So, the thrust of Government is to expedite the rolling out of vaccines. As Government we remain positive on the outlook of the economy in 2021.
“As the year progresses, we will be able to fully assess how the positive impact of some sectors of the economy such as agriculture and electricity availability counteract the negative impact of the virus on some sectors like tourism, education and the informal sector,” said Prof Ncube.
The favourable rainfall season so far has come at an opportune time when Government has put in place various initiatives such as the Pfumvudza/Intwasa Conservation Scheme and the National Enhanced Crop Productivity Scheme (Command Agriculture) targeting maize, traditional grains, soya beans and cotton.
Crops are generally in a satisfactory situation across the country and there are bright prospects for a bumper harvest. Critically, the good rains are set to boost domestic electricity generation at Kariba.
Prof Ncube said availability of uninterrupted power supply to the productive sectors will be critical in enhancing production going forward.
“We are also grateful that the country has been spared from the devastating impact of two tropical cyclones (Chalane and Eloise) that have hit the region to date with minimum damage to agriculture, infrastructure and livelihoods,” said Prof Ncube.
“The economy is also set to benefit from the relatively higher international mineral commodity prices expected this year. We know that there are high prospects of recovery of the mining industry in 2021, basing on the recent State of the Mining Industry Report produced in 2020, which indicated that about 90 percent of the miners are planning to ramp up production in 2021 while 10 percent expect to remain at the same level.
“Production is expected to increase by between 10 percent and 30 percent, while capacity use will rise to 80 percent in 2021 from 61 percent in 2020. However, we also know that these expectations are subject to downside risks from the pandemic.”