Industrial performance to remain low in 2014

Published: 25 November 2013

THE country's industrial performance is likely to remain depressed in 2014 due to a host of challenges facing the economy, HiFund Investment director Mr Arnold Chidhakwa said on Friday.

Presenting a paper on the economic outlook for 2014 and implications for labour during the 2014 Labour briefing in Bulawayo, he said aggregate demand was also predicted to remain subdued.

"As labour, we should not be unreasonable with our wage demands especially in 2014. Those cheaper imports mainly from China will continue to haunt us; India and Brazil are going to come through in terms of exporting to countries such as Zimbabwe.

"We need to focus on enhancing the competitiveness of our products to fight the competition from imports. Similarly, let us also support our local industry by buying locally," he said.

The economy, he said, continued to be threatened by "over-borrowed" individuals and corporates, company closures and scaling down of business operations, shortage of working capital and high imports from countries such as China, among others.

He said according to the Confederation of Zimbabwe Industries (CZI) manufacturing survey report released in September this year, working capital constraints remained the major fundamental deterring industrial performance.

"According to CZI manufacturing survey report, working capital constraints was the major challenge straining industrial performance contributing 40,2 percent this year compared to 32,3 percent last year," he said.

He predicted that inefficient businesses were likely to fall by the wayside adding that business restructuring was unavoidable.

Mr Chidhakwa said economic growth was likely to be driven by Small and Medium Enterprises in 2014 and beyond.

Despite the present challenges bedeviling the economy, he said Zimbabwe's economic outlook going beyond 2014 is expected to return to the 1997 levels by 2016.

"As labour, we have a role to play in ensuring the realisation of Zimbabwe's economic dream. The expected marginal rise in average inflation is ‘good' for business otherwise stagflation is not good for business," he said.

Stagflation refers to a situation whereby a country's economy fails to grow while inflation rises.

The country's inflation has in recent months continued on a downward trend with the latest figures from the Zimbabwe National Statistical Agency showing that year-on-year inflation rate for last month stood at 0,59 percent shedding 0,28 percentage points on the previous month rate of 0,86 percent.
- chronicle