Oliver Kazunga, Senior Business Reporter
THE African Development Bank (AfDB) has predicted that Zimbabwe’s economy will steadily recover next year following the devastating effects of the Covid-19 pandemic and adverse weather conditions, which crippled productivity this year.
AfDB said the envisaged economic recovery is premised on the country’s competitive advantages that include abundant natural resources, sound public infrastructure, and a skilled labour force.
In Zimbabwe, the Covid-19 pandemic was detected towards the end of March and so far more than 1 000 people have been infected while 19 people have succumbed to the deadly disease.
National lockdown measures meant to curb the spread of Covid-19 have greatly affected economic performance.
In its latest African Economic Outlook 2020 report, the AfDB says Zimbabwe will emerge stronger from the prevailing health and economic crisis through optimum exploitation of its vast natural resources riding on public infrastructure, skilled labour force as well as fiscal and monetary policy interventions.
“Zimbabwe can emerge from the current health and economic crisis strongly. The country’s vast natural resources, public infrastructure still in relatively good condition, and a skilled labour force give the country an opportunity to join supply chains in Africa and increase trade within the context of the African Continental Free Trade Area,” said the regional bank.
“Coupled with policy responses to restore stability in the foreign exchange market and control inflation, the economy could modestly recover in 2021.”
On the outlook, the financial institution, however, said recovery for most developing economies in Africa remains uncertain.The supplement to the African Economic Outlook 2020 details the likely macro-economic and social costs of the Covid–19 pandemic for Africa. It also sets out policy options for countries as they contend with the crisis, face economic slowdowns, and prepare for recovery.
“If the pandemic is of short duration so that countries can lift lockdowns and other severe containment measures by July, real Gross Domestic Product (GDP) in Africa is projected to contract by 1,7 percent in 2020,” said AfDB.
The regional financier predicts that if containment measures continue beyond the first half of 2020, there could be a deeper GDP contraction in 2020 of 3,4 percent. Cumulatively, GDP losses could range between $173,7 billion and $237 billion in 2020–21.
“Moreover, with a 1,7 percent GDP contraction, employment is projected to decline by 24,6 million jobs in 2020, and with a 3,4 percent GDP contraction, up to 30 million jobs could be lost,” said AfDB.
It said the brunt would be mostly felt by those in the informal sector, who account for more than half of the employed. The number of extreme poor in Africa was projected to reach 425,2 million in 2020 with no outbreak, but Covid–19 could increase that by 28 million with a 1,7 percent contraction in GDP and by 37,5 million with a 3,4 percent contraction.
“In 2021, those numbers would increase respectively by 34 million and 49,2 million as GDP growth continues to fall below population growth. The most affected economies are those with poor healthcare systems, those that rely heavily on tourism, international trade, and commodity exports, and those with high debt burdens and high dependence on volatile international financial flows,” it said.
“The overall impact of the pandemic on socio-economic outcomes remains uncertain. It will depend on the unfolding epidemiology of the virus, the extent of its impacts on demand and supply, the effectiveness of public policy responses, and the persistence of people’s behavioural changes,” said AfDB.
Given the global scale of the Covid–19 pandemic and its repercussions, it said governments and their development partners must respond in a coordinated, targeted, and rapid manner to limit its impacts. Across Africa, the response must be well-sequenced and multi-pronged, involving a public health response to contain the spread of the virus and minimise fatalities, said AfDB. — @okazunga