Outlook grim, says EIU

The Economist Intelligence Unit (EIU) said in its latest country outlook on Tuesday that it expected state-sponsored violence to continue as President Robert Mugabe geared up for presidential elections, probably in April 2002. In spite of violent intimidation of the opposition, and possible vote rigging by Mugabe and his ruling ZANU-PF, “we believe that Morgan Tsvangirai, leader of the opposition Movement for Democratic Change (MDC) may win the election”, the EIU said. “If this is the case, the question remains whether Mugabe and his supporters will accept defeat,” it added.

The EIU said, however, that it expected Zimbabwe’s policies, driven by ad hoc crisis management prerogatives, to stave of economic collapse before the next election. “So far the finance minister Simba Makoni, a respected businessman, has handled the crisis with skill, but it is clear that he does not have sufficient political weight to push through real changes or stand up to the president’s unrealistic economic demands,” the EIU said.

Regarding Zimbabwe’s economic growth, the EIU said the country’s GDP was estimated to have contracted by six percent in 2000 and was forecast to contract by 5.6 percent in 2001. Initially the main factor behind the slowdown was the overvalued exchange rate, which caused foreign currency shortages, made many imports unobtainable and prevented producers from recouping their production costs in domestic currency terms. However, the EIU said, these problems were now compounded by the ongoing political crisis, poor macroeconomic situation, fuel shortages and electricity cuts, all of which were placing severe constraints on the economy.