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Economic prospects for 2014

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THERE HAS been a lot of debate in the mainstream media on the likely trajectory of the Zimbabwean economy in 2014.

Basically the discourse has two major groups, namely, the pessimists and the optimists. The present writer belongs to the pragmatists or cautious optimists who happen to lie in between the two major groups.

Pessimists are predicting doom and gloom for the economy, while optimists are predicting an economic garden of roses for 2014.

The pragmatist — because he or she grounds his or her assessment on reality — simply believes that 2014 has potential to be a good year provided high quality decisions, including painful ones, are made at local and national levels to bring about the longed-for economic prosperity.

Prediction of the likely pattern of production, distribution and consumption on aggregate in the Zimbabwean economy can only be possible after conducting a detailed scientific study.

Nevertheless, there are some economic ills suffered by industry and commerce in Bulawayo for instance which do not require a systematic study simply because there are copious volumes of information in the public domain on the subject of industrial deglomeration (deconcentration) experienced by the country’s major cities.

The reason why when the subject of deindustrialisation is mentioned, people think of the once mighty Bulawayo industries that are a shell of their former selves is because in the city, deindustrialisation started a long time ago. It is, however, imperative to mention that in cities like Gweru, Kwekwe and Harare, firms have also been closing down.

ZiscoSteel which was once celebrated as a force to reckon with in secondary school and college literature is now operating below capacity.

The forgoing implies that the problem of industries closing down is actually a national problem which cannot be tackled effectively through a piece-meal approach. A holistic approach coupled with a paradigm shift is needed to address ills that affect Zimbabwean industries.

It is the hope of this writer that both corporate and individual citizens will work closely with the government of the day and its apparatus to implement the socioeconomic blue-print that is meant to revive industries, commerce and the economy as a whole and thereby alleviate the suffering of those at the bottom of the social heap.

It is not particularly useful to criticise a document like Zim Asset without studying its contents thoroughly.

This writer has taken quite a while studying the document. Grasping it fully requires a bit of time, consultations with those who know more and patience.

It is a blueprint which if implemented with utmost good faith by all key stakeholders, can greatly alleviate suffering.

The success or failure of such government pronouncements and wishes largely depends on the marketing and general acceptance of the contents.

Successful economic blueprints the world over have been well marketed ones and those which were literally owned and championed by people from the grassroots.

This year is a good year provided the greater majority of players in industry, commerce, government and non-government sectors pull together as one.

Two or more can only be better than one provided they work together as one.

Some of the economic ills that Zimbabwe needs to watch out for this year are external shocks due to disturbances in international financial and capital markets.

A careful examination of the upturn of global economy especially the current US recovery from the recession of 2007 reveals that economic gains enjoyed by the US have been facilitated by an ever increasing fiscal deficit. At present the US fiscal deficit is around $16 trillion dollars.

Indications are that it will continue growing in the foreseeable future which puts global financial markets at an even greater risk of a serious shock or shocks when it dawns on economic players that the US budget deficit is unsustainable in the future.

The question which arises is: How are economic events in international financial and capital markets linked to economic prospects in Zimbabwe?

The simple answer is that financial integration facilitated by telecommunications technology and dollarisation implies that the Zimbabwean economy has a definite umbilical cord attached to developed economies.

This therefore means that when things go wrong in global financial markets, the domestic economy may experience an exacerbation of the plight of tight liquidity in the banking and other key sectors of the economy.

One would hold bated breath and hope that while the government implements the economic blueprint which was enunciated last year (2013) the world economy does not balk under the weight of an unsustainable fiscal deficit in the United States.

 Ian Ndlovu is an economics lecturer at the National University of Science and Technology. His research interests cover business, development, economic and e-commerce issues. He writes in his personal capacity.

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