Zimbabwe's construction contracts in 4Q18

Zimbabwe's construction industry contracted by 6.3 percentage points last year. A Treasury report cited cement shortages and high prices of construction materials for the slowdown.

The construction sector registered 7.7 per cent growth in 4Q18 having been revised down from a Treasury forecast of 14 per cent growth.

"The construction industry boom that was being experienced in the economy during the1H18 suffered a huge setback following acute cement shortages and unsustainable prices of construction material during the remainder of the year. Consequently, prices of major components such as cement increased sharply from between US$7 to US$14 in August 2018 to between US$35 and US$45 per 50kg bag," stated the Treasury report.

"This has adversely affected progress in many construction activities, especially by individuals whose purchasing power was dampened by these price hikes. The situation was also worsened by cement dealers who demanded payment in US dollar hard currency, instead of the bond notes or RTGS, following the rising and unsustainable parallel market exchange rates.

"These shortages started in earnest beginning of August, as shortages of foreign currency to procure spare parts, raw materials, packaging materials and equipment also negatively impacted on the growth of the construction industry."