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Reacting to the ILO report and the eurozone crisis, BancABC group economist, Mr James Wadi said Africa is not directly linked to the global economic crisis, but it had began to feel its effects as witnessed by investor flight on the Zimbabwe Stock Exchange.
Foreign investors on the local bourse, who were predominantly the major players, are withdrawing funds from Zimbabwe and even South Africa to balance their portfolios at home, which have been negatively affected by the crisis.
“When the situation worsens we are likely to be exposed to indirect pass through effects as witnessed on the ZSE.
“We are also linked to Europe through trade and they are Africa’s biggest trading bloc thus that will definitely have an impact on our trade balance,” said Mr Wadi. He said external lines of credit and direct foreign investment inflows would go down as most investment funds in Zimbabwe come from EU and America.
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“If demand for our products is low in EU, it means trade is affected and in terms of investment inflows they cannot bring the money to Zimbabwe when they need it to resuscitate their markets back home.”
An analyst with a local securities firm who refused to be named said the country would soon experience job losses as some companies would be forced to close shop due to lack of funding.
“America is burning and EU is burning as well, there is no way they can bring money here. They don’t have the liquidity and any extra money they use it to revive their own markets,” said the analyst.
Another observer said this defeats the argument by MDC-T that it has a better plan to attract investment and create jobs.
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Its partner in Government, Zanu PF advocates an indigenisation and economic empowerment programme that is less reliant on foreign investment.
This approach has been able to sustain the Zimbabwean economy under economic sanctions, with minimal foreign aid and little foreign investment from Europe and America.
Econometer Global Capital Head of Research Mr Takunda Mugaga said Zimbabwe and other African countries were indirectly affected by the global financial crisis. However, he said unlike Europe,
Zimbabwe had not recently experienced a drop in employment rates nor was its credit rating downgraded.
“The effects have obviously been of high unemployment and the downgrading of the countries; credit rating on fears they may not be able to repay loans. But indirectly, Zimbabwe is affected in the sense that it would not receive as many tourists as it used to since the visitors will not have much to spend,” he said.- The Herald/www.scotsman.com
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