Better year for Zim’s industry

THE year 2020, a roller coaster experience for most businesses and global economies alike due to the negative impact of the Covid-19 pandemic, comes to an end in a couple of days.

It had started amid positive prospects for a stellar overall domestic economic growth, projected at 3 percent before the fallout from the viral pandemic turned the expectations upside down.

With surges in new infections across the world, as vaccines roll out begins, the world economy is forecast to contract 4,4 percent in 2020 according to the International Monetary Fund.

Further, the global lender asserts that the world economy will, however, crawl in the early days of next year before finally rebounding later in the year, spurred by stimulus packages amid vaccines roll out.

What is pleasing is that Zimbabwe’s economy is anticipated to fare better this year, than earlier projected, owing to significant growth in manufacturing, thanks (ironically) to Covid-19.

The Finance and Economic Development Minister Mthuli Ncube, in his 2021 national budget statement, projected that the domestic economy will decline by an estimated 4,1 percent weighed down by Covid-19.

But the restrictions related to Covid-19 lockdowns, which disrupted global economic activities, value and supply chains, boosted Zimbabwe’s manufacturing performances.

Manufacturing in Zimbabwe is dominated by metallic and non-metalic products, steel, wood, cement, chemicals, fertilizer, clothing and footwear, foodstuffs and beverages making.

Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya recently told a ZNCC conference that manufacturing grew by a record 26 percent in the 11 months to November 2020.

This represents the single biggest growth in a year for over two decades since the meltdown that started at the turn of the century following the fast track land reform and imposition of sanctions by the west.

Following years of disinvestment and challenges related to a coterie of factors, including antiquated equipment, policy flip flops, high cost of power and utilities and raw material shortages, industrial sector growth was marginal, if at all realised.

The remarkable rebound in manufacturing is anticipated to cushion the domestic economy from brick bates of the marauding coronavirus and result in much less contraction of 2,1 to 3 percent.

“The economy is growing significantly, especially in the third quarter and fourth quarter of this year, if you talk about the companies themselves. Look at the cement business; look at Lafarge, look at PPC.

“The numbers can show you, look at Delta, loot at the retail sector in this country, look at Bata, look at Nestle; they are now exporting… We need to have more of these conversations.

“I am not saying a cosmetic statement; I have seen growth in this economy. As a bank, we think that we are going to do better than (minus) 4,1 percent that projected as GDP growth in 2020.

“We think we are going to do between 2 percent and 3,5 percent negative growth, as opposed to 4,1 percent (negative growth because we have seen that the economy is not doing badly,” he said.

Dr Mangudya said scattered instances of price increases while inflation is trending below 5 percent demonstrated the fact that demand was strong and businesses were capitalising on it.

If there was no money and if the local demand for goods and services was weak, the central bank chief observed, the majority of people would not be buying as much as they are and prices would fall.–heral.l.zw