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Zimbabwe economy seen contracting up to 6% in 2019 – treasury document

By MacDonald Dzirutwe

Zimbabwe’s economy is projected to contract by up to 6% this year due to a drought that hit farming output and electricity generation but is expected to rebound in 2020 on better agriculture prospects, a treasury document showed on Monday.

Finance Minister Mthuli Ncube
Finance Minister Mthuli Ncube

Hopes that Zimbabwe’s economy would quickly rebound under President Emmerson Mnangagwa, who took over after the late Robert Mugabe was deposed in a coup in November 2017, have faded fast as citizens grapple with soaring inflation which has eroded earnings and savings.

The national treasury said in a pre-budget planning document that Zimbabwe’s economic problems were being compounded by shortages of foreign currency, fuel and electricity.

“The economy is, therefore, projected to underperform by as much as -3% to -6% in 2019,” the document said, adding that the economy was expected to grow 4.6% next year.

Zimbabwe’s economy is grappling with its worst crisis in a decade, with triple-digit inflation, rolling power cuts and shortages of U.S. dollars, medicines and fuel which have revived memories of the 2008 hyperinflation under Mugabe.

The treasury said the month-on-month inflation rate was projected to fall to around 10% by December this year before easing to 2.3% at the end of 2020.

The government had kept spending in check, the treasury said, and is expecting a budget deficit of up to 4% of GDP this year. Reuters