|Let’s jealously guard our economic gains|
|Wednesday, 23 May 2012 22:00|
Now, Minister of Finance Tendai Biti is also thinking twice and has said 9,4 percent is somewhat far-fetched.
All the arguments point to such challenges as lower-than anticipated receipts from diamond sales, poor liquidity, the effects of rising debt and such challenges that are threatening to constrict the economy.
I know the likes of Kenias Mafukidze and the US$100 billion economy are resolute that the economy will soon be churning double-digit GDP figures and nothing will take their eyes and hearts from Vision 2040.
The Mid-Term Policy has already predicted a 7 percent economic growth for the next few years,
On face value the economy is certainly facing clear and present danger if some of the challenges are not addressed but instead of singing the sad song of our economy going down the drain let’s maximise on the next six months of the year to right any wrongs and introduce measures that will effectively counter the downside.
Zimbabwe needs to keep the momentum of the last three years by registering significant growth this year. This obviously does not come from mere wishful thinking but we will need to think outside the box.
In his State of the Economy statement last week the Minister of Finance painted a gloomy picture about the economy, one with potential to usurp all the energy being directed to the economy presently.
“We are facing a number of downward risks which are threatening our macro-economic projections. The key reason is simply that we have not been able to meet our revenue targets and the key cause is non-performance of our diamond revenue. It is quite foreseeable that in the mid-term budget statement, major projections will be downwardly reviewed,” warned Minister Biti last week.
Of course, he is miffed by the poor showing by the diamond sector. He had hoped to have at least US$600 million from that source to finance part of the Budget but then again the whole diamond issue has become more political than economic.
So many impediments are standing in Zimbabwe’s way in the diamond trade but all should come right soon. More diamonds are still to be discovered and Zimbabwe is expected to account for a significant part of the global diamond figures hence it cannot be frustrated for too long in this regard.
Between January and March US$30,4 million was received form diamonds against a target of US$122,5 million.
The issue of the external debt, which has now risen to more than US$9 billion, remains a challenge but we hope the strategies set in motion to reduce and eventually elimiunate the debt will bring results sooner rather than later.
I had a chat with African Development Bank president Donald Kaberuka in Ethiopia and he mentioned that the debt situation remained a challenge for this country in terms of attracting multilateral or bilateral financing facilities.
Furthermore, a trade balance of US$997 million in the negative due to the economy’s continued reliance on imports and underperforming exports as stated in Minister Biti’s statement, needs to be watched.
Capacity utilisation has remained low in industry hence growing reliance on imports. This scenario exposes the economy to imported inflation and such aspects as exported jobs, challenges that will have a bearing on overall economic growth come year-end.
Annual inflation rose slightly to 3,98 percent to 4,03 percent for April and fears were that it would end the year slightly higher than the projected 4,5 percent.
The figure is expected to rise in the coming few months due largely to rising fuel and food prices, among other factors.
Zimbabwe’s economic resurgence over the past three years has largely been premised on a stable macro-economic environment and the economy can ill-afford turbulence in this aspect.
Investors have even been enticed by the stability hence the need to guard the figures jealously. Production of basic foodstuffs both at farm and factory levels will need to go up.
A modest 4 percent growth in capacity utilisation in the first quarter of the year needs to be beefed up to get the economy going.
Falling global demand for minerals because of the eurozone crisis is also expected to have a negative impact on GDP growth. The World Economic Forum Summit held a fortnight ago challenged African economies to diversify exports and desist from exporting primary products.
Africa has largely been an exporter of raw materials which are then processed elsewhere and brought back at high price.
This has been a major leak for most economies.
Another challenge facing Zimbabwe is the same old story of energy shortfalls. Zesa’s erratic power supplies have worsened.
The power supplier has even failed to stick to its own laod-shedding schedule, presenting a picture that the challenges in this sector are far from over.
This is one aspect of the economy that will need to be dealt with to maintain the growth momentum.
All these challenges should not take us backwards as a country.
Instead, we should deliberately summon all our energy to face the challenges head-on. We should not settle for low growth figures but we should instead seek to achieve or even surpass the target.
Economists and other commentators need not be alarmist but we should instead maximise on the current positives while working at resolving any impediments to sustainable growth.
Zimbabwe is fast becoming a force to reckon with in the region and it presently holds the distinction of having the lowest inflation in the region. Let’s not surrender such titles easily but we should all work at defending our achievements while consolidating the growth momentum of the past three years.
In God I Trust!
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