New Zimbabwe.com

Govt bumps up economy size to $26 bln, says personal incomes now $1,500; Analysts not convinced

By Alois Vinga


THE country’s statistics agency has, surprisingly, rebased the economy, increasing it by more than 40 percent to $26 billion.

In addition, the average income earned per person annually has also been revised to $1,500 up from $950.

The development was confirmed by finance minister Mthuli Ncube in Harare on Friday as he launched his two-year Transitional Stabilisation Programme (TSP) which is set to run until 2020.

According to the minister, annual gross domestic product (GDP) was now at $25.8 billion after the adjustment from $18 billion.

The minister did not however explain the rational for the rebase.

“By 2019 we project nation’s Gross Domestic Product to be at $29 billion and by 2020 it will be sitting around $32.8 billion. Rebasing the economy’s size is not new and in actual fact most countries have done that,” he said.

Economists however, expressed mixed reactions on the projections.

Former Reserve Bank of Zimbabwe (RBZ) macroeconomist, Aeneas Chuma said the projections are unrealistic and far-fetched.

“The figures are unrealistic because, as we are speaking, the economy is shrinking and, at the same time, the informal economy which is being referred to as one of the sources of growth is fragmented and not really doing much as the bulk of activities are undertaken for the basic need to survive,” he said.

Chuma pointed Transitional Stabilisation Programme (TSP) is not different from the previous government wish-lists because it does not show exactly how these targets and projections will be achieved.

“… what is disappointing is that there is no talk on the sources and levels of investment to make these projections a reality,” Chuma added.

Another economist, Dr Prosper Chitambara, described the projections as technically high-sounding but practically questionable.

“Considering where we are today and the road we need to travel ahead, this is just unachievable,” he said.

“We need a time-frame for both transitional and transformational and these cannot be achieved at such a pace.

“One major demerit is that there is general lack of inclusivity in the approach because the projections are being made outside input from the key economic sectors players.”

Chitambara pointed out that clearing debts, public sector restructuring, state enterprises reforms, improving ease of doing business and expanding the economy’s size cannot be undertaken simultaneously.