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Zimbabwe at a Glance: 2001-02

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Zimbabwe at a Glance: 2001-02 COUNTRY REPORT Zimbabwe At a glance: 2001-02 OVERVIEW Zimbabwe will continue to suffer the most serious political and economic crisis in its 20-year history, and it now appears increasingly unlikely that the president, Robert Mugabe, will finish his current term which runs until April 2002. The EIU currently expects the MDC to call an extended national strike early in 2001, which will worsen an already poor economic situation and is likely to turn into such widespread protest that the president will be forced to resign. But there is a very real possibility that the protests could run out of control and turn extremely violent. Meanwhile the economy will remain in a steep downward spiral, with negative real GDP growth of 6.1% in 2000 and 3.3% in 2002, a huge fiscal deficit, rapidly rising inflation and a falling exchange rate. Moreover, the economy could be damaged in the long term as a result of the current “fast-track” land resettlement policy. The downward spiral is only likely to be broken after Mr Mugabe has left office, real reforms are introduced and external assistance is resumed. Modest real GDP growth of 1.8% is forecast for 2001. Key changes from last month Political outlook • The political situation continues to deteriorate as the government increasingly ignores court rulings. Economic policy outlook • The minister of finance presented the 2001 budget in parliament. It fails to address the real root of the huge fiscal deficit and highlights his political weakness. Economic forecast • The budget deficit for 2000 is now forecast at 28.4% of GDP. It will be 22.7% of GDP in 2001. • The forecast current-account deficit has been reduced to 3.2% of GDP in 2000, 3.7% of GDP in 2001 and 3.3% of GDP in 2002, as a result of a larger contraction of imports than previously forecast. December 2000 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through our digital portfolio, where our latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising conferences and roundtables. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.20) 7499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: http://www.eiu.com Electronic delivery This publication can be viewed by subscribing online at http://store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office London: Jan Frost Tel: (44.20) 7830 1183 Fax: (44.20) 7830 1023 New York: Dante Cantu Tel: (1.212) 554 0643 Fax: (1.212) 586 1181 Hong Kong: Amy Ha Tel: (852) 2802 7288/2585 3888 Fax: (852) 2802 7720/7638 Copyright © 2000 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 1350-7095 Symbols in tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK Zimbabwe 1 Contents 3 Summary 4 Political structure 5 Economic structure 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2001-02 7 Political outlook 8 Economic policy outlook 9 Economic forecast 12 The political scene 17 Economic policy 21 The domestic economy 21 Economic trends 22 Mining and industry 23 Agriculture 24 Infrastructure 26 Financial and other services 26 Foreign trade and payments List of tables 10 International assumptions summary 11 Forecast summary 18 Government finances 20 Government finances: vote appropriations 24 Tobacco production List of figures 11 Gross domestic product 11 Zimbabwe dollar real exchange rates 21 Zimbabwe and SADC 22 Platinum price 26 Tourist arrivals © The Economist Intelligence Unit Limited 2000 EIU Country Report December 2000 . Zimbabwe 3 Summary December 2000 Outlook 2001-02 Zimbabwe will continue to suffer the most serious political and economic crisis in its 20-year history. As a result it now appears increasingly unlikely that the president, Robert Mugabe, will finish his current term which runs until April 2002. The EIU currently expects the opposition Movement for Democratic Change (MDC) to call an extended national strike which will worsen the economic situation. Although this will not force Mr Mugabe’s departure, it will eventually lead to widespread political protests, which could turn very violent, and will ultimately force the president to resign. Meanwhile the economy will remain in a steep downward spiral, with negative real GDP growth of 6.1% in 2000 and 3.3% in 2002, a huge fiscal deficit, rapidly rising inflation and a falling exchange rate. Moreover, the economy could be damaged in the long term as a result of the current “fast-track” land resettlement policy. The downward spiral is only likely to be broken after Mr Mugabe has left office, real economic reforms are introduced and external assistance is resumed. Modest real GDP growth of 1.8% is forecast for 2001. The political scene Rises in the price of bread and sugar led to violent protests on the streets of Harare in October. The government threatened to arrest the leader of the opposition MDC on grounds of inciting violence, while the MDC launched impeachment proceedings against the president. A ZANU-PF party conference is to go ahead in December, where the future of the president may be debated. Although the Supreme Court rules them illegal, land seizures are increasing. Economic policy The minister of finance, Simba Makoni, has presented the 2001 budget. Although it attempts to be pro-business, it fails to address the root causes of the current fiscal deficit, which will not improve substantially in 2001, adding to the already large domestic debt. The domestic economy Job losses are mounting as the economy deteriorates. Despite a series of small devaluations, the Zimbabwe dollar is still overvalued. The general outlook in the mining and agricultural sectors remains poor even though some projects are going ahead. Noczim is managing to keep fuel supplies flowing, and relations between ZESA and Eskom have improved, although fuel is in short supply and electricity cuts are frequent. Foreign trade and The tourism industry is struggling with the sharp fall in visitor number. payments Zimbabwe has been excluded from the US government’s Africa Growth and Opportunity Act. Editors: David Cowan (editor); Pratibha Thaker (consulting editor) Editorial closing date: December 1st 2000 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule © The Economist Intelligence Unit Limited 2000 EIU Country Report December 2000 4 Zimbabwe Political structure Official name Republic of Zimbabwe Form of state Unitary republic Legal system Based on Roman-Dutch law and the 1979 constitution National legislature House of Assembly with 150 members, 120 of whom represent geographical constituencies and are elected by universal adult suffrage every five years; eight are provincial governors, ten are customary chiefs and 12 others are appointed by the president National elections March 1996 (presidential) and June 2000 (legislative); next elections due in March 2002 (presidential) and June 2005 (legislative) Head of state President, elected by universal suffrage for a six-year term National government The president and his appointed cabinet; last major reshuffle July 2000 Main political parties Zimbabwe African National Union-Patriotic Front (ZANU-PF), the ruling party since 1980, governed by a 138-member Central Committee and a 24-member Political Bureau (Politburo), holds 62 seats in parliament. The Movement for Democratic Change (MDC) was formed by the trade union movement in September 1999 and emerged as the main opposition party following the June 2000 election, with 57 seats. The Zimbabwe African National Union-Ndonga (ZANU-Ndonga), has one seat. A number of smaller parties and independent candidates contest elections President Robert Mugabe Vice-presidents Simon Muzenda Joseph Msika Defence Moven Mahachi Education, sports & culture Samuel Mumbengegwi Environment & tourism Francis Nhema Finance & economic development Simba Makoni Foreign affairs Stanislas Mudenge Health & child
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