Zimbabwe's economy is projected to shrink by 4.5 percent in 2020 from 3 percent earlier projected due to the negative impact of the COVID-19, Finance and Economic Development Minister Nthuli Ncube said Thursday.
He was presenting the mid-term budget and economic review statement in the parliament.
He said the economy was poised to contract severely had the government not provided a stimulus package of 18.2 billion Zimbabwe dollars (264 million U.S. dollars) to companies in June to cushion them from the harsh effects of the pandemic.
"In the absence of the above stimulus package and assuming prolonged and severe impact of the crisis, the economy would contract severely," he said.
"Therefore, a combination of government and external development support in mitigating the COVID-19 pandemic is expected to alleviate deeper contraction of the economy to a projected -4.5 percent GDP growth in 2020, against the initial budget projection of 3 percent growth," the minister said.
However, the economy is anticipated to recover and record GDP growth of about 7.4 percent in 2021 before moderating to around 5 percent thereafter, the minister added.
Out of the 300 million U.S. dollars international funding appeal made by government in April to mitigate the impact of COVID-19, development partners have so far pledged 202.6 million U.S. dollars of which 26 million U.S. dollars has already been disbursed.
Ncube said the pandemic had further worsened the country's economic woes, characterized by climatic shocks in the form of drought and Cyclone Idai, energy challenges and currency volatility.
The drought, in particular, affected agriculture, water and energy sectors, with spill-overs to the rest of the economy while the situation was further aggravated by currency volatilities which led to skyrocketing prices of goods and services.
Ncube said the country's tourism, non-food manufacturing, mining, financial services, transport and distribution and education sectors had been the most severely affected by COVID-19, while sectors including health services, ICT, manufacturing of food stuffs, electricity and water had registered gains.
The minister said the agriculture sector will contract by 0.2 percent in 2020, against the 5 percent originally anticipated due to declining prices and late onset of rainfall.
Maize output for the year, however, increased by 24 percent from 852,000 metric tonnes in 2019 to 1,060,000 tonnes in 2020.
Traditional grains production is estimated at 152,515 metric tonnes in 2020, 103 percent up from 75,209 tonnes produced in 2019.
The mining sector is projected to slow down to -4.1 percent in 2020, weighed down by the COVID-19 pandemic and uncompetitive prices, erratic power supplies and loss of skills.
During the first quarter of 2020, platinum group metals and diamond registered strong performance compared to the same period last year while gold, chrome and nickel performed below expectation, the minister said.
Manufacturing is expected to contract by 10.8 percent in 2020 against 1.9 percent originally projected while tourism will shrink by 7.4 percent due to the impact of COVID-19, the minister said.
The transport and communication sectors, however, are however projected to grow by 3.2 percent in 2020, driven mainly by enhanced communication activities that is offsetting the dampening effect of the transport sub-sector, the minister said.