Economic winners and losers in 2000

Africa is expected to be the world’s fastest growing region this year, with Mozambique the best performing economy, according to the Economist Intelligence Unit (EIU). The EIU’s latest report anticipates that higher commodity prices will nudge overall growth in sub-Saharan Africa to 4 percent in 2000, and forecasts particularly good results for three southern African countries. In Mozambique, GDP growth is expected to hit 10 percent, in Botswana 8.9 percent, and Angola 8 percent - all based on boosted mineral production. In Botswana, a sharp expansion in diamond output combined with increased vehicle production is expected to result in a 2 percent increase in GDP in 2000 from the 6.9 percent forecast for 1999. In Angola, growth is expected to double on the back of rising oil production and higher international prices despite the country’s return to civil war. Mozambique, one of Africa’s few consistent success stories, has seen its economy grow at an annual average rate of 10 percent between 1996-98, albeit from an extremely low base as a result of almost two decades of civil conflict. During 1996-98, agricultural merchandise exports increased by 42 percent. However, next-door-neighbour Zimbabwe is likely to record another poor year in 2000 with GDP growth of just 2 percent. According to the London-based EIU, the government is set to miss all of the fiscal and macro-economic targets agreed with the International Monetary Fund. The deficit is forecast to remain above 5 percent, inflation to average 40 percent, with an average exchange rate of Zimbabwe $52 to US $1 compared to the 1999 value of Zimbabwe $38 to US $1. But Zimbabwean economist Eric Bloch, although broadly agreeing with the EIU assessment, said that 2000 could witness the “first hint of recovery” after the disastrous economic performance of last year when inflation peaked at over 70 percent and the budget deficit stuck at 10 percent. He told IRIN the “imponderables” at this stage of the new year are the quality of the agricultural season, which on average accounts for 20 percent of GDP; the strength of world mineral prices, Zimbabwe’s second most important export; how soon the government is able to withdraw its troops from the Democratic Republic of Congo; and the impact on business confidence of parliamentary elections due this year. Although GDP growth could expand to 3 percent if all goes well, “there will still be very great hardships” he warned, particularly with employers unable to increase wages in line with inflation.