Zimbabwe in recession for first time in 10 years, finance minister says

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Mthuli Ncube said the economy was projected to recover and grow 3 percent next year


Recession … Finance minister Mthuli Ncube says economy to grow by 3 percent next year

HARARE – Zimbabwe’s economy is set to shrink by 6.5 percent this year – its first contraction in a decade – after a drought and power shortages, the finance minister said on Thursday.

Power generation could be stopped at the largest hydro plant due to low water levels, minister Mthuli Ncube also said.

Ncube told MPs in the resort town of Victoria Falls that Zimbabwe would spend more than US$300 million to import 840,000 tonnes of maize, a staple crop, after the drought left more than half the population in need of food aid.

The national treasury said on October 7 that the economy was projected to shrink by up to 6 percent this year.

Hopes that the economy would quickly recover under President Emmerson Mnangagwa, who came to power after the late Robert Mugabe was removed after a coup in 2017, have dimmed quickly as Zimbabweans grapple with soaring inflation, rolling power cuts and shortages of foreign exchange, fuel and medicines.

Ncube said the economy was projected to recover and grow 3 percent next year on the expectation that there would be better rains to power agriculture as well as improved foreign exchange inflows and electricity generation.

Power cuts have hit industry and mining, the biggest export earner. Earnings from mining fell to US$1.9 billion between January and September this year, compared to US$2.4 billion during the same period in 2018, central bank governor John Mangudya said.

Ncube said water in the Kariba dam, which has capacity to produce 1,050 MW, was so low to an extent that “we are dangerously close to a level where we have to cut off power generation.” Kariba was producing 122 MW on Thursday.

Zimbabweans are experiencing daily hardships with prices of basic goods, fuel and electricity soaring, while the Zimbabwe dollar currency that was re-introduced in June has continued to weaken against the U.S. dollar.

The national statistical agency stopped publishing annual inflation figures in June, but with prices surging, economists examining the official monthly data put the rate in September at 380 percent, the highest since the hyperinflation horrors of 2008.

Critics accuse Mnangagwa of lacking commitment to political reforms and failure to tackle entrenched corruption, but the 76-year-old leader has pleaded for time and patience. – Reuters


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