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Troubled economy may deepen Zimbabwe's humanitarian crisis, UN warns

Troubled economy may deepen Zimbabwe's humanitarian crisis, UN warns

A troubled economy threatens to cause the humanitarian crisis in Zimbabwe to deepen, the United Nations Regional Inter-Agency Coordination Support Office for southern Africa warned today.

By the end of the year, Zimbabwe's real gross domestic product (GDP) is expected to contract another 12 per cent, while inflation is likely to spiral to 200 by December. In this environment, the Office said, speculation and consumption thrive, and few investments are made in the productive sectors. "The lack of investment, coupled with a savings rate that has fallen to 27 per cent, are hampering recovery and pushing the country further into poverty," it said.

The Office also warned that Zimbabwe is experiencing a severe foreign currency shortage, making it difficult for the Government to import basic foods such as wheat and maize meal, while raising the cost of humanitarian relief efforts and agricultural inputs such as fertilizer.

Meanwhile, tobacco production, which accounted for about a third of Zimbabwe's foreign currency earnings last year, is expected to reach only about 25 per cent of the normal level while crop production already reduced by a drought in June will drop by another 10 per cent to 40 per cent due to natural disasters.

The Office said the farming sector is also subject to ongoing land resettlements and recurring fuel shortages. "Farmers are struggling with high input prices, a shrinking domestic market and controlled producer prices that are too low to make production profitable," it said.

The UN Development Programme (UNDP) in Zimbabwe is working with the World Bank and the International Monetary Fund to assist the Government of Zimbabwe in addressing these problems, according to the Office.

In July, the UN launched a $611 million appeal for 14.4 million people in six southern African countries placed at risk by a combination of prolonged drought, erratic rainfall, and the HIV/AIDS pandemic. The appeal, which in addition to Zimbabwe also covers Lesotho, Malawi, Mozambique, Swaziland, and Zambia, has so far received only 44 per cent of the funding needed.