Former MDC legislator Eddie Cross says the International Monetary Fund (IMF) is wrong in forecasting that Zimbabwe will experience a recession in 2019.
Cross says the IMF is being too pessimistic, and Finance Minister Mthuli Ncube is right that Zimbabwe’s economy will grow bt 3 per cent. Said Cross:
I think that they (IMF) are being too pessimistic. Mthuli (Finance minister Ncube) believes that we are going to get growth of 3% and I think he is right. I do not think the fund (IMF) understands the Zimbabwean economy.
What do I agree with them is that I think we have got to recognise that what the government has done in the last year has been to shift the economy from consumer-led growth path to export-led growth and the changes in monetary policy have emphasized that.
So, the exporters are in a situation where they are in receipt of very substantial premiums on export proceeds and this is going to lead to growth, export-led growth. But, clearly, if you boosted consumer demand by boosting incomes or reducing Paye (Pay As You Earn) or whatever it would have an immediate impact on growth.
With export-led growth, there is a time lag because what happens is that you introduce the incentives and then it takes time before they kick in and result in exports.
There is a lag between providing the incentives, assuring the exporters that the incentives are not temporary and that this is a genuine change in policy and the actual growth that will result in that.
So, I think the fund has looked at that and said ‘look you are going to shock domestic consumption’. China is doing exactly the opposite by shifting from export-led growth to domestic demand-led growth and when you make a shift like that it changes the growth pattern.
So, I think we are going to see growth, I don’t think they are right about the negative growth, but they are right in a sense that we are going to see subdued growth until the export industry can respond to the export incentives.
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Edward Graham Cross (born 1940) is a prominent Zimbabwean economist and politician. He is a former member of parliament for Bulawayo South. He was also a founding member of the Movement for Democratic Change (MDC-T). Following the Military Coup in November 2017, Cross became a... Read More About Eddie Cross
Professor Mthuli Ncube is the Minister of Finance and Economic Development.He was the Chief Economist and Vice President of the African Development Bank ,financial, economics, investment, and public policy expert, entrepreneur and academic. Professor Ncube divides his time between the private sector in Switzerland and... Read More About Mthuli Ncube