Omicron: Mthuli fears for economy
FINANCE and Economic Development Minister, Professor Mthuli Ncube says he is keeping his fingers crossed that the current wave of the Covid-19 (Omicron variant) pandemic will not get to the previous dreadful levels, which triggered stringent lockdowns that were counterproductive to the economy.
The Treasury chief ’s sentiments come on the back of the rising number of infected people since the advent of the Omicron variant.
The first, second and third waves of Covid-19 caused significant negative economic impact across the globe due to reduced productivity, loss of life, business closures, trade disruption, and decimation of the tourism industry.
Zimbabwe’s economy had begun to show signs of resurgence following bruising battering of the industry by the first and second waves of the pandemic experienced in 2020.
The domestic economy is expected to grow by 7,8 percent this year, largely driven by agriculture, mining and construction across the country.
Despite the pandemic, production has expanded, with industrial capacity utilisation expected to reach 61 percent this year from 47 percent last year, according to the Confederation of Zimbabwe Industries.
A number of mines have been opened or reopened while production capacity has been increased in a number of mining firms. Still, demand is expected to pick up on the back of investment projects lined up.
For instance, mining houses are planning to ramp up production in 2022 by between 3 percent and 100 percent, according to the State of the Mining Survey Report 2022.
Previously, Covid-19 has resulted in the imposition of travel bans and movement restrictions worldwide in a bid to curb its spread, which negatively affected most business activities.
According to the World Bank, nearly every business in the world has been negatively impacted by Covid-19 in one way or another, while a quarter of companies have experienced a decline in sales, which fell by at least 50 percent between October 2020 and January 2021.
Zimbabwe has procured more than 20 million vaccines, including support from its development partners, and the Government is looking forward to upscaling the vaccination campaign in view of the new variant.
Addressing delegates at the launch of Zimbabwe National Chamber of Commerce’s (ZNCC)’s inaugural State of Industry and Commerce Survey 2021, Professor Mthuli Ncube said he prayed the pandemic would not get to the previous levels, which led to the imposition of strict lockdowns which were detrimental to the economy.
“Our current major threat is the Covid19 pandemic situation. It is our hope that the current wave does not get bad enough to warrant further lockdowns which are counterproductive to the economy.
“On our part, we have so far spent US$204 million on procurement of 17 million vaccines and syringes, most of which was financed through budget savings of US$100 million from the previous year,” said Minister Ncube.
On the other hand, recommendations of the ZNCC industry and commerce survey implored the Government to maintain the momentum in the Covid-19 vaccination campaign towards achieving herd immunity to reduce the need for frequent lockdowns.
Data shows that nearly every business in the world has been negatively affected by Covid-19, through multiple shocks at the same time.
According to the World
Bank, companies’ sales dropped 27 percent in
October 2020-January
2021 from pre-pandemic levels.
The spread of the virus is likely to continue disrupting economic activity and negatively impact manufacturing and service industries, especially developed countries, it is anticipated that the pandemic will lead to financial markets volatility.
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The unprecedented impact of the Covid19 pandemic has negatively affected international tourist arrivals which according to the latest United Nations World
Tourism
Organisation (UNWTO) world tourism barometer reduced by 85 percent between January and May 2021 compared to the same period pre-pandemic year (2019).
ZNCC vice president Mike Kamungeremu implored business to be innovative in face of the looming pandemic and remain strong amid the difficulty brought by the disease.
“As the current variant is said to be more malignant than the previous ones, let me hasten to say let us not fight the pandemic from the position of fear, but from a position of courage and strong will to survive in face of the adversity, “said Mr Kamungeremu.
Economist Eddie Cross said the current variant would cause debilitating effects to the economy, but acknowledged that the variant was weak to warrant stringent lockdowns like the ones before.
“The Covid-19 remains a threat to the global economy, but we have experienced worst variants as compared to this one,
“The current wave is infectious, but mild, so I don’t see the country going to the previous position where stringent lockdowns
were instituted,” said Mr Cross.