Former underdogs outperform Zim

Former underdogs  outperform Zim

gdpTHE country’s economy has contracted so much over the past few years that it now trails many former underdogs, some of which now boast per capita Gross Domestic Product (GDP) levels 54 times that of Zimbabwe’s, reports have indicated. Per capita GDP is used as an indicator of standard of living, with higher per capita GDP for a country meaning a higher standard of living. The slump in per capita GDP contradicts denials by politicians that there is massive poverty in Zimbabwe, with joblessness estimated at over 80 percent.

Researchers at the Labour & Economic Development Research Institute, Zimbabwe (LEDRIZ) indicate that between 1950 and 1990, Harare’s GDP per capita was higher than that of India and China. Zimbabwe’s GDP per capita was estimated at US$701 in 1950 (China US$448), US$938 in 1960 (China US$662), US$1 295 in 1980 (China US$1 061). GDP per capita for Zimbabwe was estimated at US$446 last year (China US$3 583)

The country’s GDP per capita was also higher than that of India during the period, according to researchers at Trade Economics. While South Korea and Thailand’s GDPs per capita were double that of Zimbabwe during the period, latest reports indicate that South Korea’s has outpaced Zimbabwe’s by 54 times, rising to US$23 892 last year from US$854 in 1950, and US$15 732 in 2003, according to researchers at Angus Maddison and LEDRIZ.

During the same period, Zimbabwe’s GDP per capita has actually declined from US$701 in 1950, hitting its lowest ever rate of US$344 in 2009, before rising to US$446 last year. It is projected to decline to US$441 this year. “Zimbabwe has failed to learn from other countries’ experiences but descended into crisis and paralysis and is now a classic example of how not to (govern),” LEDRIZ says.

“Yet Zimbabwe’s per capita GDP was more or less at the same level as those of South Korea and Thailand during the 1950s and 1960. By 2003, however, South Korea’s per capita GDP was almost 16 times larger than Zimbabwe’s, and Thailand’s was seven times larger (2009). Per capita GDP levels of the newly emerging economies, China and India, were below Zimbabwe’s level until 1990. By 2003, Zimbabwe’s per capita GDP amounted to a fifth of that of China and half of that of India. Zimbabwe was left behind when these countries undertook reforms,” notes LEDRIZ.

“These high-growth economies benefited in two ways; they imported ideas, technology and know how from the rest of the world; and they exploit global demand, which provide them with a deep, elastic market for goods,” says LEDRIZ. Zimbabwe, once the second largest economy in the Southern African Development Community until 2000, now has the lowest GDP per capita among peers at the same level of economic growth.

GDP per capita is estimated at US$821 in Zambia, US$5 785 in Namibia, and US$5 4832 in Angola, US$565 in Mozambique and US$447 in Madagascar. Zimbabwe is battling to overcome economic regression highlighted by deepening deindustrialisation and informalisation of the economy. The African Development Bank says annually the share of the manufacturing sector in GDP was at its peak in 1992, at 26,9 percent, before dropping to 7,2 percent in 2002.

A manufacturing sector survey by the Confederation of Zimbabwe Industries indicates that industrial capacity utilisation declined to 18,9 percent in 2007 from 35,8 percent in 2005, and to less than 10 percent in 2008. The figure was estimated at 39,6 percent last year. Executives and analysts warned without intervention, the situation could degenerate, creating ground for social implosion in the country. They spoke as President Robert Mugabe visited China to agree deals for a bailout package for the struggling economy, said by some newspaper reports to be in the region of US$4 billion.

“There are World Bank and International Monetary Fund forecasts that are saying our economy is grinding to a halt,” said NICOZ Diamond chief executive officer, Grace Muradzikwa. “I pray that this will not happen,” she said.

Connect With Us

Fingaz Polls

Can the rand rescue Zimbabwe’s economy?