By Tapiwa Gomo
WE are more than two weeks into the new year and the excitement from the festivities has subsided with most people feeling the pinch of the so-called January “disease”. For most families, school fees and other educational requirements are priorities even with uncertainty over the opening of schools.
The long-term question is what the year will bring in terms of economic prospects. However, there are global, regional and national factors to take into account in assessing possibilities in 2022.
This year started with a rise in Omicron cases — a new COVID-19 variant — which forced government to tighten preventive measures, hence the delay in schools opening. It also meant scaling up public health response thus diverting financial resources meant for other economic activities.
Drawing from past experience, it is clear that lockdowns have not been effective hence people need to be allowed to return to their normal functioning. Even if cases reduce significantly, the COVID-19 pandemic will continue to impede economic activity and growth as financial resources will continue to be needed for prevention and response.
At global level, prospects look bleak. After a strong recovery in 2021, the global economy is slowly headed for a recession amid a rise in inflation, debt and income inequality that can potentially jeopardise the recovery, mainly for poor countries, according to the World Bank’s latest Global Economic Prospects report.
This will affect major economies such as the United States and China. For countries that depend on export of minerals and other raw materials, there is a possibility of a deceleration in global demand as global growth is expected to slow down significantly from 5,5% in 2021 to 4,1% in 2022 and 3,2% in 2023.
Regionally, enforcement and/or change of immigration policies by neighbouring countries will have a huge bearing on diaspora remittances and households that depend on them.
Recent estimates show that more billion dollars are remitted to Zimbabwe per year via formal channels. There is still unaccounted for amounts sent from South Africa, Botswana, Zambia, Namibia and other neighbouring countries through informal channels.
The recent clampdown on illegal immigrants in South Africa may spread to other countries and this may see a reduction in remittances. South Africa braces for general elections in 2024 and there are key African National Congress (ANC) meetings in 2022, perhaps part of the reason they are being tough on illegal immigrants is to reclaim the lost grassroot support.
Locally, amid the COVID-19 pandemic, the country will see a remarkable rise in political activity as parties gear-up for 2023 elections. Politicians across the world have demonstrated reluctance to adjust or delay their political calendars even though COVID-19 cases continue to surge.
Campaigns by political parties are likely to impact production and economic activity, while several policies may set the course for the country’s economic trajectory up until election time.
In the past, elections were known for slowing down the economic pace due to several factors including violence, interference, disruptions and policy uncertainty.
In his budget speech in November last year, Finance minister Mthuli Ncube hinted that the country’s expenditure would almost double purportedly to alleviate the impact of the COVID-19 pandemic and provide help with economic recovery for the two consecutive years of economic shrinkage due to the pandemic. This will see an expenditure increase to US$8,78 billion from an estimated US$4,8 billion in 2021.
Given that it is campaign season, it is no surprise that part of this expenditure will go towards infrastructure and State-owned companies, including recapitalising the national airline.
Noble as it is, infrastructure development has been the trump card for the current government and it will want to sell the idea that it cares about roads, transportation and other public facilities.
While that will be the main message to the electorate by the ruling party, it will be the same infrastructure that will continue to hinder growth. By the time of elections in 2023, it will be nearly seven years since the current government assumed power and yet the country does not have a clear plan of action to resuscitate our national electricity generation capacity.
Fast growing economies are powered by reliable energy supply and yet our electricity and fuel supply remains unpredictable due to their centralisation in the hands of cartels.
There is no doubt that if there was focus on energy, the country would have powered its industry and attracted new investors and this has been one of the major impediments to economic growth.
- Tapiwa Gomo is a development consultant based in Pretoria, South Africa. He writes here in his personal capacity.