ZIMBABWE’S ambition to achieve strong economic growth rate which is above that of regional peers could go off the rails as policy uncertainty heightens during election time, a new report has shown.
BERNARD MPOFU
The southern African country, which has a history of disputed election outcomes, is expected to go elections later this year. According to a research note done by local brokerage firm Inter-Horizon Securities (IH), polls may lead to excessive spending, policy inconsistency and depressed economic growth.
Analysts and business organisations say ominous signs of potentially turbulent elections are there as the campaign season swings into motion.
“As the country heads towards elections, there is increased uncertainty about the direction the economy is going to take,” IH Securities said in its research note titled Zimbabwe Equity Research Equity Strategy 2023 January 2023: An Economy at Crossroads.
“The country faces risk from likely increased spending to finance election-related activities ahead of and during forthcoming polls. Historical data shows, for the most part, the country registers poor economic performance during an election year. Assuming the same trend is maintained, annual inflation is expected to increase while GDP growth rate will decline.”
Official figures show that 2022 gross domestic product (GDP) for the country is expected to increase by 4% driven by mining, agriculture and construction industries. Mining is expected to grow by 10% in 2022 driven by expected increased output in gold, platinum group metals, chrome, nickel, diamond and coal.
“Foreign Direct Investment into the country remains muted compared to peers in the region. In the upcoming year, elections will be front and centre within the region,” the report further reads.
The Democratic Republic of Congo, Madagascar and Zimbabwe are expected to go to elections this year while South Africa, Malawi, Namibia, Mozambique and Botswana decide on who should govern them in 2024.
The International Monetary Fund however expects Zimbabwe GDP to increase by 3.5% in 2022 whilst estimates from the government forecast 4%. Government GDP growth outlook is premised primarily on improved performance from the mining, construction as well as energy sectors.
Mining is expected to grow by 10% in 2022 from the mid-year projection of 9.5% driven by expected increased output in gold, platinum group metals (PGMs), chrome, nickel, diamond and coal. Aiding to this growth are record high international commodity prices and increased investments in the sector.
