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Herald Reporter
Zimbabwe’s economy grew by 8,5 percent in real terms last year, even more than was originally estimated, and more than making up for the 7,8 percent decline in 2020, the first and worst year of the Covid-19 lockdowns, the Zimbabwe National Statistics Agency (ZimStat) has found.
The recently released figures built up from the exceptionally thorough data collection that ZimStat does, and hence the delay in giving the final results since the agency wants to count absolutely everything very carefully, dispel a few intuitive initial estimates and shows that Covid-19 was the big economic killer in 2020 with only partial recovery in the worst hit sectors last year.
For a start, ZimStat found that while the good agriculture season last year and the steady growth in mining and quarrying had made major contributions, it was the turning of the corner in manufacturing that was exceptionally significant, as that major sector moved from steep decline to low-level growth.
Agriculture actually increased the value of its output in 2020, a drought year.
Mining held steady for all practical purposes with a tiny value rise, but manufacturing dropped 18,5 percent, even worse than the 10,1 percent drop in retail, partly offset by the 11,9 percent rise in financial and insurance services among the “big five” contributors to GDP.
Most other services, especially those related to tourism and hospitality crashed. So the 7,8 percent 2020 decline was basically from Covid-19, not drought.
The big jump last year was led by farming, with mining coming in more strongly, financial services continuing to grow although not so dramatically and retail making up most of its value loss of 2020 and with manufacturing starting to recover, but with value rising just 1,2 percent.
But the end of the value falls in manufacturing, and stronger growth in other sectors explains the jump last year in GDP.
Although the 2019-2020 rainy season was the second year of drought, agricultural production actually rose in 2020, admittedly by just 4,1 percent, showing the growing grip the Second Republic had on its inputs schemes, marketing and the switch from ad hoc programmes to far better planned and administered intervention in farming.
This meant that the 7,8 percent decline in 2020 in the gross national product using constant pricing was not the result of the drought.
We had overcome enough of those effects so that the farmers, fisheries and foresters managed to increase the value of their output and make up for a bit of the major declines in manufacturing and services.
The 17,5 percent rise in agricultural value last year was therefore a combination of continued upgrade in the Government schemes, plus the rainfall.
The rainfall was icing on the cake, rather than recovery from a dip, since there was no dip in 2020, just slower growth.
Farmers were not really affected much by Covid-19 in either year since they were not locked down and had very low infection rates, not gathering in crowds.
With the average growth of 8,5 percent last year farming moved forward at around twice that rate, and this was seen in its contribution to GDP moving up from 11,1 percent to 12 percent.
But the growth in 2020, modest as it was, saw farming’s contribution rise from 9,8 percent in 2019 to that 11,1 percent.
Mining continued to make improvements in both years. The growth in the value of mining output was a tiny 0,2 percent in 2020, something expected from the lower global demand and lower prices as a direct result of Covid-19, but at least it did not decline in Zimbabwe, as it did in many mineral-rich countries.
Last year as global markets, demand and prices started recovering from the first year of Covid-19 mining and quarrying saw a significant 5,9 percent growth, below the average 8,5 percent growth for the economy as a whole but still a major contributor.
Mining’s percentage of GDP rose from 12 percent in 2019 to 13,1 percent in 2020, but declined to 12,8 percent in the high growth of last year as farming pumped in almost as much with far higher growth.
The real economic problem identified by ZimStat in the productive sectors was in manufacturing. There was a massive decline in value of 18,5 percent in 2020.
Lockdowns put in place to fight Covid-19 had a far greater effect than previously estimated on industry, despite attempts to ameliorate their effect.
The rot ended last year when manufacturing turned the corner, just, with output rising 1,2 percent and routine information suggests the rise is now stronger as capacity utilisation grows this year.
That massive fall saw manufacturing’s contribution to GDP fall from 14,2 percent in 2019, the second largest contributor to GDP after wholesale and retail and so the largest contributor among the pure productive sectors, to 12,6 percent in 2020, when it was overtaken by mining.
The very modest recovery last year saw its contribution fall to 11,7 percent, below both mining and farming, and making it the smallest contributor among the three purely productive sectors.
Retail and wholesale remain easily the largest contributors to GDP. In 2019 and 2020 the contribution was 19,7 percent, despite the 10,1 percent decline in 2020 as the lockdowns hit, although not as badly as they hit industry since food shops stayed open even in the most severe lockdowns.
But the growth in production last year, very good for farming, reasonable for mining and at least starting in manufacturing, saw the retail and wholesale contribution fall to 19,2 percent despite the growth of 8,1 percent last year as it made up most of its 2020 falls.
While almost one in five dollars in wealth creation in Zimbabwe comes from selling things, the retail and wholesale sector, which includes car and motorcycle repairs in the ZimStat lists, the three productive sectors of agriculture and fisheries, mining and quarrying, and manufacturing accounted for 36,3 percent last year, compared to 36,8 percent in 2020 and 36 percent in 2019.
Without the 2020 manufacturing crash they would be nearer 40 percent.
The rest of the economy is often described as services sectors, led by financial and insurance, which have been growing.
But the most severe damage from Covid-19 is seen in accommodation and food service activities, which saw a near disastrous decline of 61 percent in 2020 and only a partial recovery of 38,5 percent growth last year.
That growth rate was easily the highest in the economy, with only electricity anywhere close on 33,9 percent, but it came after a disaster so that sector is the one still most severely hit by the 2020 slump and among the sectors hit hard by Covid-19 still the sector that by last year had the most ground still to make up.
The most telling points from the detailed ZimStat GDP figures are that our agriculture and mining coped well with Covid-19 and the growing climate proofing in farming means we are coping with drought, even growing farm output in a dry year.
But manufacturing, retail and some services, especially hospitality type services, were badly hit by Covid-19 and while recovering in the second year of Covid-19 still had ground to make up.
Online Reporter