The ongoing political and economic turmoil in Zimbabwe has cost South Africa a massive R15-billion in the three years up to the end of 2002, says Tradek economist Mike Schussler.
In work done for the Zimbabwe Research Initiative (ZRI) he also found that the crisis had cost the Southern African Development Community (SADC) a total of R18-billion.
The ZRI is a non-governmental organisation arguing for change in Zimbabwe. Its chairperson, Shepherd Shonhiwa, a Zimbabwean expatriate, is chief executive of Tepco, a black economic empowerment oil company.
”These are conservative figures,” he added when presenting his findings at a briefing in Johannesburg.
”The R15-billion loss to the South African economy translates into a total GDP (Gross Domestic Product) loss of 1,3%. Put differently, the South African economy (or GDP) would have been around 1,3% larger by the end of 2002 if it were not for the crisis in Zimbabwe for the last three years,” Schussler said.
”This equals just over 0,4% extra growth per year in GDP for the South African economy.”
Schussler said the rand would also have been around 3,3% stronger than presently and the consumer price inflation excluding mortgages (CPIX) would have been 1.2% lower than the 11,2% in March. The SA Reserve Bank (SARB) uses the CPIX to determine its inflation target which has been set at between 3 and 6% for this year.
The economist said that this, in turn, would have meant a prime interest rate 0,7% lower than the present 17%.
Zimbabwe in 2002 cost South Africa’s ”real economy” R9 017-billion — comprising R6 014-billion in goods not exported to what was once South Africa’s sixth largest trading partner; R2 088-billion in services not rendered; R180-million for tourists who failed to arrive, R270-million in lost foreign direct investment and R465-million for unpaid goods and services rendered.
Schussler said the last figure included non-payment for fuel and electricity.
Using a complicated formula Schussler calculated the effect of Zimbabwe on the ”financial economy” — typically the value of the rand, inflation and interest rates — as R6-billion, making the overall, conservative total R15-billion.
The economist also warned that the economic situation in Zimbabwe was so dire that it would take more than a few months or a new government to recover once a turn-around started. The economy there was still shrinking and inflation was spiralling with some expecting it to break the 500% level this year. In comparison, South Africa’s CPIX inflation index stood at 11,2% in March, the most recent month for which data was available.
Although Zimbabwe was no longer one of South Africa’s top 10 export partners, the country was still not isolated from an economic implosion in its northern neighbour, Schussler cautioned.
An implosion could wipe 7% off the value of the currency, trading at R7,81 to the dollar on Tuesday afternoon. On the other hand, a more stable Zimbabwe would mean a more stable rand. – Sapa