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.