Zimbabwe National Chamber of Commerce (ZNCC) impact analysis on COVID-19 projects that the Gross Domestic Product (GDP), year on year growth will further decline to -9% in 2020.
Zimbabwe’s GDP last year went down to -6.5% from 4.8% acquired in 2018 due to drought and low water at Kariba which negatively affected energy production for required manufacturing and production in the country.
“From the 2020 Budget projections, the economy was projected to register a 3% growth, which was too optimistic, given that in 2019 economic growth was revised downwards to -6.5% in 2019,” ZNCC says.
“Given the impact of Covid-19 which has resulted in contraction of economic activity across all sectors, we project that the economy is going to decline by at least -9% in 2020.”
The analysis also expects government expenditure to go up due to the global pandemic.
“From the 2020 budget revenue collections for the year were estimated at ZWL$58.6 billion. To avoid undesirable impact of deficits on money supply and macroeconomic stability, the 2020 Macro Fiscal Framework espoused a low Budget deficit of around 1.5% of GDP to give expenditures of ZWL$63.6 billion, which is a ZWL$5 billion deficit, the analysis says.
“Given that there is contraction in economic activity across key sectors, business operations are being weighed upon by the Covid-19 pandemic and that the pandemic is already weighing on employment; revenues for 2020 will be affected.
“As a result we project a Budget deficit of more than 5% of GDP. Government expenditure is going to increase due to the effects of Covid-19.”
ZNCC also projects cumulative merchandise exports of below US$3.5 billion for 2020 compared to US$4.5 billion in 2019.
Merchandise imports are expected to contract to US$4.5 billion from US$4.8 billion in 2019.
“In 2019, the current account registered a surplus of US$311.2 million on account of a sharp fall in imports against a marginal fall in exports on the back of strong performance in remittances.”
“In 2020, we project a sharp decline in imports, due to the restricted importation of merchandise imports by cross border traders and impact of national lockdowns on importation of raw materials and other finished products. The level of imports is going to offset exports given that some potential exports have been affected/ lost due to covid-19.”
In terms of jobs, ZNCC says the workforce will be made redundant as some businesses will not be able to adapt to the effects of COVID-19.
“There is going to be loss of employment, 25% of permanent formal jobs will be lost and 75% of casual/temporary formal jobs will be lost as businesses lay off workers given the sharp contraction in many sectors,” the analysis says.
“The Tourism sector will be the most hard hit as it is expected to shed almost 25% of the total formal sector employment followed by the manufacturing sector.”
“If the total lockdown is extended without resorting to partial lockdown some of the leisure and tourism operators might completely collapse.”
ZNCC also conducted a survey which shows that companies lost over $5 million in revenue during the first 21 days of lockdown.
Results were collected from 210 respondents from the service (44%), manufacturing (40%), retail (8%), construction (5%) and other sectors of the economy (3%).
The results show that 27% of the respondents indicated that they lost over $5 million in revenue, 48% lost below $ 1 million, 17% lost between $1-$3 million and 8% lost between $3-5 million.
In terms of the projected revenue loss due to COVID-19, 38% of the respondents indicated that they will lose above $5 million, 30% predicted to lose below $1 million, 20% expected to lose between $1-$3 million and 12% forecasted to lose between $3-$5 million.
