Govt needs to act now on economy

HARARE - One year after the July 31 elections, extraordinary measures are needed to save the economy, but are not forthcoming.

Growth since July 2013 has been too sluggish to move the economy out of its depressed state and restore it to full health.

The employment rate has continually fallen for 12 straight months.

The intensifying leadership fights within the ruling Zanu PF have remained of concern as the economy enters a period of deep recession.

The extent of the economic damage inflicted by recession partly stems from a lack of aggregate demand for goods and services and a biting liquidity crunch that is hitting all sectors of the economy.

Policy deficiencies and continuing land invasions   are the greatest risk to full economic recovery.

Given the escalating political infighting in Zanu PF, any action to spur economic recovery by government is unlikely.

Zanu PF needs to urgently arrest the declining economy. The gap between actual and potential economic output and labour market health is almost entirely a function of deficient economic demand — households, businesses, and governments are not spending enough to keep all workers and productive capacity employed.

In its 2014 first half economic analysis, economic think-tank Econometer Global Capital, said Zimbabwe’s economic growth averaged just 1,8 percent and it was due to worsen in the
second half of the year.

An average of two medium-sized corporates, five small enterprises and 0,5 large corporates close shop every month in Zimbabwe with smaller towns the most affected by de-industrialisation, the Econometer’s report says.

This is ominous for the economy.

This calls for the ruling party to urgently revise policies which directly and significantly impact negatively on the job creation prospects which include the indigenisation policy.

The large rise in budget deficits is mainly a symptom of the weak economy.

There is a danger inherent in failing to spur near-term economic growth to ensure full recovery. Zanu PF is instead fixated on its factional fights and succession politics at the expense of the economy. Succession politics is the wrong focus.

Further, real growth rates in 2014 are projected to slide below 2 percent.

Guaranteeing a return to economic recovery requires that Zanu PF trains its eyes on the economy once again. This is not outside the current bounds of political viability.

Zanu PF’s continued trotting on this disastrous path indicates how divorced from economic reality that party has become.

    Comments (5)

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    quick - 20 August 2014

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    quick - 20 August 2014

    Sure that the economy is not doing well, it is important for the government and all concerned parties to act swiftly. Do something for the unemployed, create employment.

    jim - 20 August 2014

    Who are you talking to. These guys don't even know the econmy has shrunk,it is the povo who knows about. I saw one of these top people's son splashing thousands of us dollars on whisky and spending 10 000 usd a day is not an issue with these people and you ask them to act now, no they would want it that way. look at the cars they drive, houses they live in, how opulent their life styles are, how they fight to remain there in the looting swimming pool and you say they must act, now they just must go.

    Maita Manyuka - 21 August 2014

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    GALLERYCARTRIDGES - 21 August 2014

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