The African Development Bank (AfDB) has projected Zimbabwe’s economy will shrink by between 7.5% if the pandemic subsides by July (baseline), and 8.5% if it continues through to December (worst case) 2020.
Although the bank had earlier on projected Zimbabwe’s economy to grow by 4.6% this year and 5.6% in 2021, it now says that production is expected to fall largely due to the outbreak of the coronavirus pandemic and associated shocks and policy actions taken to limit the infections.
Furthermore, AfDB notes that fiscal deficit would remain above 5% due to the negative effects of the tax relief measures and weak business activity, with tourism earnings set to worsen foreign exchange shortages in the country.
The deterioration of the trade balance and secondary income account will push the current account to a deficit territory of 2% of GDP this year, which could widen further to 2.7%, wiping out a surplus of 1.1% percent posted in 2019.
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The bank projects that Africa’s GDP will contract by 3.4% in 2020, dropping by 7.3% from the pre-COVID19 growth projection. In addition, the bank says that cumulative GDP losses could range between $173.1 billion and $236.7 billion in 2020-2021.
For 2021, AfDB projects GDP losses could be from $27.6 billion (baseline) up to $47 billion (worst case) from the potential GDP of $2.76 trillion without the pandemic.
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