Zimbabwe’s economy is set to rebound in 2021 after a recession brought on by the coronavirus pandemic and drought, with mining, agriculture and moderating inflation anchoring the recovery, Finance Minister Mthuli Ncube told parliament on Thursday.
Even before the outbreak of Covid-19, the economy was strained by foreign currency shortages, spiralling inflation, unemployment above 90%, a breakdown of social and health and drought that left more than half the population needing aid.
“Economic growth is expected to rebound in 2021 from the consecutive two-year slump to record plus 7.4% growth. This growth will be driven by strong recovery in agriculture, mining, electricity,” Ncube said in a budget speech.
Ncube said inflation was slowing and would next year average 135% year-on-year and below 1% month-on-month. Revenue collections would more than double next year.
But while Ncube was bullish, analysts had doubts about Zimbabwe’s growth prospects in the short term. They cited inflationary and wage pressures, foreign currency shortages and lurking climate shocks that could still hit farming output.
The finance minister previously projected economic growth in 2019 and 2020 but the economy has contracted.
Ncube said a narrowing budget deficit this year, stabilising exchange and an end to money printing by the central bank were indications that the government was serious about fiscal and monetary reforms.
Public sector unions, however, say while treasury seeks to balance the budget, it has been at the expense of workers’ salaries that have been eroded by inflation, leading to strikes.
Hospitals were going without medicines and schools grapple with shortages of learning material, the unions say.