A DROP in metal prices coupled with effects of an El Niño -induced drought will present downside risks to Zimbabwe’s economic growth, a new report by a research firm has shown.
Official figures show that Zimbabwe’s real gross domestic product growth remained high at 6.5% in 2022 from 8.5% in 2021 driven by a continued growth in agricultural production.
The mining sector benefitted from rising global prices and together with tourism contributed to overall economic growth.
According to the IH Securities third-quarter equities report, downside risks globally include the ongoing El Niño phenomenon, which historically has raised global food prices by more than 6% in a year and poses risks to the global food chain.
Moreover, price volatility will likely persist for the remainder of 2023 driven by increased geopolitical strains in the wake of the Israel-Hamas war, IH says.
“Downside risk will emanate from a drop in global metal prices and rising local costs which could hurt mineral earnings this year,” IH says.
“Continued disruption of international supply chains could constrain global demand conditions which, compounded by the decline in international mineral commodity prices, could see emerging markets and developing economies constrained.”
Last year, the mining sector benefited from rising global prices and together with tourism contributed to overall economic growth.
According to the ministry of Finance, this season’s expected drought and a dip in commodity prices could potentially cut economic growth to 3.5% from the projected 5.3% in 2023.
Finance minister Mthuli Ncube this week revised economic growth target for 2024 to 3.6% from 5.2% due to the impact of the El Niño phenomenon.
Speaking at the 2024 pre-Budget seminar in the capital, Ncube also maintained a bullish outlook this year driven by agriculture and mining.
The IMF sees Zimbabwe’s economy expanding by 4%, an upward revision from the initial forecast of 3.2%.