Africa’s economic pulse- Zimbabwe where are we, how low is our heartbeat?

By David Damiyano

Global growth is moderating with 2017 growth pegged at 3.1% whilst incoming figures suggest that global economic growth is slowing down as a result of a downward momentum, in trade and investment. It is only in the United States were growth is sustainably accelerating due to her substantial pro-cyclical fiscus stimulus.

Pro-cyclical fiscus is attained when a country saves more and more during its economic burst time. The talk of the town China is expected to experience a gradual deceleration together along with most industrial economies.

Fierce escalating protectionism is posing a challenge to the growth in China. India’s economic activity is accelerating despite currency pressures and in turn forcing tighter monetary policy with Brazil trailing slowly. Argentina and Turkey are engraved in economic crises.

The developing economies and emerging economies are expected to and continue to recover from the downturn in commodity prices of 2015-2016. In Sub-Sahara, growth slowed in the large African economies but remained stable in many other countries.

Economic growth in Africa is just keeping pace with the growing population at the average growth of 2.3% in 2017 to 2.7% in 2018. This sluggish growth could have been partly informed by economic weakness of Nigeria, South Africa and Angola which are the region’s three largest economies. Nigeria’s recovery faltered in the first half of the year as oil production fell, partly due to pipeline closures.

The agriculture sector contracted, as conflict over land between farmers and herders disrupted crop production especially in Kenya, partially offsetting a rebound in the services sector and dampening non-oil growth. Growth in Angola was subdued by underinvestment in the oil and mining sector while South Africa’s economy drowned into a technical recession as a result of contracting economic activity in agriculture, mining and construction.

Debt vulnerability remained high in Zimbabwe as a result of access to international capital markets, non – resident participation in domestic debt markets and non-concessional debt has increased. In Zimbabwe, non-concessional debt has risen to more than 50% of public total debt. Debt sustainability has further deteriorated and at the turn of 2017, Zimbabwe was among the eight African classified as in debt distress under the World Bank–International Monetary Fund Debt Sustainability Framework.

In the growth taxonomy, Zimbabwe continued to register poor growth performance in 1995– 2008 and 2015–18 being the worst country falling and behind. Zimbabwe has continued to enjoy favourable intraregional trade since 2016 topping the list in Sub Saharan Africa.

It has reported intraregional export shares that exceed the (weighted) average of the region (that is, more than 10 percent of GDP). This could be explained by high appetite for foreign currency in the country. Personal remittances offered 89.6% contribution to gross foreign financing inflow (% of GDP). Even though this remittance contribution is not statistically significant, Zimbabwe can provide deepening policy transformations on remittances.

Direct investment is significantly contributing a poultry 1% to gross foreign financing inflow (% of GDP). Despite the rapid growth exhibited by Sub-Saharan African countries during 1996–2016, they have made meagre progress on convergence in standards of living relative to industrial economies, notably, the United States. Zimbabwe is among the seven countries worst hit by poor labour productivity which has exceeded 2.5% per year despite high literacy rate.

From the Africa’s economic pulse, Zimbabwe is therefore a non – resource rich country (surprising) because rents from natural resources (excluding forests) does not exceed 10 percent of gross domestic product. From a World Bank income classification, Zimbabwe is a low income, poor country with other 27 Sub-Saharan countries whilst Seychelles is the only high income country.

David Damiyano is a researcher and lecturer at Bindura University of Science Education in the Faculty of Commerce, Economics Department. [email protected] +263 777108147

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