(formerly IRIN News) Journalism from the heart of crises

Economic crisis set to worsen

[Zimbabwe] President Robert Mugabe
Zimbabwe Gov

Predictions for Zimbabwe's short term economic future are dire, no matter who wins presidential elections in March, according to two leading regional analysts.

Zimbabwe's decline has been as spectacular as it has been tragic. The economic gains of the 1980s have been wiped out and Zimbabweans are now 7 percent poorer than they were in 1970. Government figures show that health spending per head has fallen from US $23.60 in 1991 to US $14 today. An estimated 300,000 out of 1.3 million industrial and farm workers have lost their jobs over the past two years. Some economists are predicting a GDP growth rate of minus nine percent for 2001.

"Zimbabwe's economic meltdown cannot be prevented - it is already occurring. Key businesses, especially in manufacturing and mining, are finding it impossible to continue to operate within the current forex [foreign exchange] regime and political climate. Lasting, if not permanent, damage has been inflicted on the commercial farming sector, the country's engine of growth as a result of the fast-track land resettlement programme," Greg Mills, director of the South African Institute of International Affairs said in a recent paper.

Zimbabwe, the region's second largest economy, "is arguably ... a fulcrum on which the future of Southern Africa today rests: if it tips the right way, the region could face a more prosperous future; if not, things could deteriorate," Mills added.

Tony Hawkins, director of the Graduate School of Management at the University of Zimbabwe, envisages three post-election scenarios for Zimbabwe. The first would be a victory for President Robert Mugabe, the second a medium term slide into instability, and the third a win for opposition leader Morgan Tsvangirai.

A Mugabe victory would mean "more of the same", Hawkins told IRIN. His re-election manifesto has been "incompatible with economic stabilisation and recovery", promising a return to a command economy and the rejection of International Monetary Fund/World Bank policies.

Zimbabwe's isolation, underlined by the imposition of European Union sanctions this week, would mean minimal foreign capital inflows, the outflow of skills, and "accelerating economic decline". Zimbabwe would be dependent on humanitarian assistance, "as it's not going to get any proper aid", Hawkins said.

In the medium term, the situation would become unsustainable, completing the "economic implosion of this place". Alongside collapsing social services, the food supply situation - already in trouble - would worsen, prompting civil unrest.

Both Mills and Hawkins rate the third scenario - a victory by Tsvangirai and the Movement for Democratic Change (MDC) - as Zimbabwe's best option. It would offer a "return of the rule of law", "rational, orthodox economic policies", and orderly and transparent agrarian reform, Hawkins said in a recent overview of the Zimbabwean economy. He forecasts US $2.5 to US $3 billion in international aid over the next four years which would raise annual economic growth to 4 percent from 2003.

Zimbabwe's Deputy High Commissioner to South Africa, Danson Mudekunye, rejected the analysis that a Mugabe victory would be a recipe for further decline. "Just take it with a pinch of salt," he told IRIN. "If I were to give a prediction it is that after the election Zimbabwe will be as successful as ever."

Mudekunye said Zimbabweans had been under "unofficial" sanctions since 1998, imposed because of the government's land reform programme and military intervention in the Democratic Republic of Congo (DRC). "But it has not broken our spirit. The collapse that has been predicted since 1998 has not come."

But according to Hawkins, with international election observers not yet in place, and numerous allegations of political violence and intimidation targeting the MDC in the countryside, "as you play them [the scenarios] through you end up with the worst-case scenario of civil unrest".

He told IRIN that if the urban electorate - broadly MDC supporters - perceive the March election as rigged, there could be a popular insurrection along the lines of Serbia or Cote d'Ivoire. With the decision on Monday by European election monitors to leave the country, frustrated by Harare's delays over accreditation, "I do think we've moved one stage closer to the worst-case scenario," Hawkins said.

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