Zimbabwe economy to decline by 5 percent - UZ economist

Economist Tony Hawkins of the University Of Zimbabwe Graduate School Of Business has cast a pessimistic economic outlook for Zimbabwe economy saying it  would decline to 5 percent as oppose to 7 percent growth forecast as there is no investment to sustain growth.

He said expected growth is "a pie-in-the-sky".

"After three strong rebound years since dollarization, the economy will lose momentum in 2012/13.

It is in transition from a three-year period of rebound (7.5% a year) to a growth plateau of (say) 5% annually. This is "not abnormal" Hawkins told a media house strategic meeting.

The economist said several countries that have taken an exchange-rate stabilization route enjoyed a strong rebound, followed by either a long period of plateau growth or a sharp reversal and steep decline.

He said prospects of  7% or 8% annual growth  seem "conceivable, but unlikely. Unlikely because the fundamentals of the failed state are still in place – very little has changed."

The economist said the country still needs to get clear cut answers on policy issues such as rationalizing land redistribution, indigenization, debt Relief, currency regime, privatization, public sector reform and the rule of law.

"To expect that without convincing, rational answers to these – and other, especially policy, – questions there will be sufficient investment to sustain 8% growth is pie-in-the-sky.  It is not going to happen"

He said inflation is likely to be significantly higher than the 5% projected in the 2012 budget, possibly returning to double figures before the end of 2012.

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