Tourism a spark of hope in ailing Zim economy
Memory Mataranyika and Malcom Sharara
Harare - Zimbabwe has reduced growth projections for the country's gross domestic product to 1.5% from the 3.2% projected in the 2015 National Budget.
In a mid-term budget review statement on Thursday, Finance Minister Patrick Chinamasa said earlier projections had been weighed down by the agricultural sector.
Chinamasa said the country ratcheted up $3.1bn in imports and $1.3bn in exports, as he presented his fiscal policy statement in Harare and called for competitive labour laws.
There is likely to be slower growth in agriculture although the mining sector is expected to see stronger output at 3.5%, despite suppressed commodity prices which could hit earnings from the sector.
Chinamasa said while overall performance during the first half of the year indicated some modest growth, particularly in the sectors of mining, manufacturing and tourism, agriculture is expected to decline further by about 8.2%. The sector had been projected to grow by 3.4% in the original budget.
Tourism is set to rebound by as much as 5% on renewed visitor interest. South Africa, China, Europe and other regions are leading tourist arrivals into the country, say experts.
"The modest growth recorded by other sectors is being weighed down by the drought-induced underperformance of agriculture," said Chinamasa.
He added that the deceleration in overall economic growth signifies the contribution of agriculture, and the need for drought-proofing the economy given the adverse effects of climate change.
A total 18% of planted cereals was written off in the 2014/15 agricultural season.
Amid a growing divide between employees and employers in the country, Chinamasa said recent court rulings allowing companies to sever ties with employees had sparked progressive debate on labour laws in the country.
"We should benchmark our legal framework with economies that are experiencing rapid growth," he emphasised.
Chinamasa underscored that state enterprises are saddled with salary arrears amounting to $300m for workers.
Experts say labour costs in Zimbabwe are excessive.
However, manufacturing is likely to remain in the doldrums. Chinamasa said the power tariff for mining and manufacturing would be pegged at 6 cents per kWh, although other factors such as expensive capital and obsolete plant and machinery are also seen as major drawbacks for a rebound in industry and manufacturing.
"We will not recover manufacturing with the prevailing double-digit lending rates," he said.
Taking into account the developments from January to June 2015, Chinamasa revised the year's total revenue estimation to $3.6bn, from the original budget projection of $3.99bn.