Economists say a small upturn in in Zimbabwe's economy will depend on recovery of its crucial agricultural sector, but add the country has a long way to go before stabilizing.
When Zimbabwe's acting finance minister, Herbert Murerwa, presented his annual budget to parliament Thursday, he said Zimbabwe's economic decline has been halted and the outlook for the coming year is good. Mr. Murerwa said the economy would grow more than five percent in 2005, compared to a decline of close to 30 percent over the past five years.
The recovery, he said, would be driven by a revival of the key agriculture sector and a slowdown of inflation, which soared to 622 percent at the beginning of 2004, but which the Central Bank says declined to about 200 percent last month.
But some economists say the numbers do not add up noting not only the contraction in the country's economy, but also the unemployment rate, which is over 70 percent. Acute shortages of food, medicine, gasoline and other essentials also will fuel a future downturn, they say.
John Robertson is a veteran economist in Harare. He says a rosy outlook for Zimbabwe's economy is unlikely because there are still companies, especially those in the manufacturing sector, that are closing every week. And, he predicts the already high unemployment rate will rise in 2005.
Economists at Zimbabwe Finance News, who publish daily indicators, said Friday that the agricultural outlook was "bleak.
University of Zimbabwe's business school pofessor Tony Hawkins said Friday the rate of Zimbabwe's decline has slowed down during 2004, largely on the strength of increased government spending and increased lending by the Central Bank.
He said a gentle recovery during 2005 would depend on increased agricultural production.
Mr. Mugabe's announcement of a bumper grain harvest last season have been questioned even by members of parliament from his own party, who fear food will run out in parts of the country early next year.
Mr. Mugabe's government blames the economic crisis, the worst since independence in 1980, partly on the refusal of Western financial institutions to cooperate with his regime.
Independent analysts, however, blame government mismanagement. They point to the loss of agricultural production since the seizure in 2000 of 5,000 white-owned farms which were given to black Zimbabweans with little experience in large-scale agriculture and who are short of seeds and fertilizer.