HomePoliticsMugabe's economic forecast seen as 'wishful thinking'

Mugabe’s economic forecast seen as ‘wishful thinking’

Dumisani Muleya/Paul Nyakazeya

ECONOMIC analysts yesterday described as wishful thinking claims by President Robert Mugabe that the economy will grow by 1-2% this y

ear in the midst of an unprecedented meltdown.

Speaking at Independence Day celebrations on Tuesday Mugabe said the economy would grow by 1-2% this year. He said the anticipated growth rate would be driven by a 9% expansion in agricultural production.

Last year government claimed the same sector would grow by 28% but all signs are that output continues to slide.

“The economy is expected to grow by between 1-2% this year, underpinned by agriculture with a forecast growth rate of 9%,” Mugabe said.

He referred to the National Economic Development Priority Programme (NEDPP) launched on Wednesday. As first revealed by the Zimbabwe Independent two weeks ago, NEDPP was formulated by the Zimbabwe National Security Council, chaired by Mugabe, and is supported by the National Economic Recovery Committee and the Technical Team of Experts.

There has been a series of failed similar programmes before this.

Analysts said there was no way an economy whose real gross domestic product has contracted by a cumulative 35% in the past five years could bounce back overnight to register a 2% growth rate when a number of functioning economies are struggling to achieve that.

Last year government claimed — against all reasonable forecasts — that the economy would grow by 5% before it climbed down to a figure of 3,5%, then 3%, and finally 2-2,5%. The International Monetary Fund predicted a 7% contraction before revising it to 4% but independent economists maintained 7% was about right. The government later admitted during its annual budget presentation that the economy had in fact contracted by 3,5%, a figure deemed a conservative estimate by many.

Zimbabwe’s economy has been rapidly declining over the past few years — by 10% in 2003, 4% in 2004 and 7% or 3,5% (depending on who you believe) last year — earning itself the dubious distinction of being the fastest shrinking economy in the world outside a war zone.

Zimbabwe’s social and economic conditions have continued to deteriorate, reflecting a weakening base.

In particular, the disorderly implementation of the land reform programme has left agriculture in ruins. Current threats to grab mines compounds an impression of a country where policy is unpredictable.

Concerns about governance, the rule of law and human rights, and the continued violation of property rights have severely damaged investor confidence and promoted capital flight and emigration, thus contributing to further decline.

Unemployment is nudging 80% and increasing, social indicators have worsened, and the widespread HIV and Aids pandemic remains largely unchecked. Food shortages have necessitated massive food imports and donor assistance.

Arguably the most damaging dimension to misrule, the economy is plagued by a record 913,6% inflation rate which is fuelled by money printing, interest rates of above 500%, a yawning budget deficit, and a worsening fiscal crisis.

There are also shortages of foreign currency due to poor export performance, lack of balance-of-payments support, freezing of donor aid and drying up of direct foreign investment critical to economic growth. Lack of forex has in turn caused the shortage of fuel, electricity, spares, machinery, inputs and basic commodities. Thousands of companies have closed, worsening the unemployment situation.

Independent analyst John Robertson said Mugabe’s projection of economic growth was “bizarre”. He said there was no way an economy could grow when there was no investment.

“What the president is effectively saying is that the economy will this year grow by over 35%, from a negative of 35% in the past seven years, which is not possible,” Robertson said. “You cannot achieve growth where there is no investment.”

A review of economic recovery programmes adopted by government since 2000 shows that their policies, content and objectives are all similar. The names of individuals tasked to implement the blueprints are virtually the same. The only difference is the packaging and the current six to nine months timeframe, which is likely to make NEDPP’s failure even more spectacular than its predecessors.

Otherwise, the rest is the same, save for the fact Mugabe — whose policy and leadership failures are blamed for the current crisis — is now part of the team preparing to plaster over cracks in the dam wall.

In 2000, government adopted the Millennium Economic Recovery Plan, followed by the National Economic Revival Programme in 2003, the Macroeconomic Policy Framework last year and now NEDPP. There have also been initiatives by the central bank.

Prior to that government has tried to introduce economic reforms through the Economic Structural Adjustment Programme and the Zimbabwe Programme for Economic and Social Transformation. All these programmes, including Vision 2020, failed dismally because of a mixture of insincerity and incompetence.

The epitaph of failure is written all over NEDPP due to the current political and economic circumstances which — without fundamental reforms — will not allow a policy-driven approach to work.

Analysts say the recycling of unworkable economic blueprints shows a terrible policy paralysis in government. They say current problems in Zimbabwe can no longer be resolved by the incumbent using the same policy approach as he is the author of the problems in the first place.

An economist with a commercial bank who requested anonymity, said the only way Zimbabwe can pull itself out of the morass is through adopting sensible policies and rebuilding good relations with the international community.

“Mugabe’s remarks are just empty rhetoric tinted with calculated political newspeak which will not change anything, except making the situation worse,” the economist said.

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