FINANCE minister Mthuli Ncube has hinted that Zimbabwe may soon review its economic growth estimates due to several internal and external headwinds buffeting the economy as the International Monetary Fund and independent estimates project a sceptical picture of the current growth targets.
Ncube recently revised Zimbabwe’s economic growth projections to 4.6% from 5.5% despite maintaining a bullish outlook in the mining sector, the country’s key economic driver, accounting for more than half of export receipts.
The global economy is now projected to grow by 3.2%, down 0.4 percentage points from the April 2022 forecast of 3.6%, largely due to reduced purchasing power, tighter monetary policy in the United States and Europe; Further lockdowns and the deepening real estate crisis in China; and spillover effects from the geopolitical situation in Eastern Europe.
“GDP is still expected to grow by 4.6% in 2022 (Work is underway to review the projections). There are downside risks to this projection which include global developments and domestic factors,” Ncube told business leaders at the just-ended Confederation of Zimbabwe Industries annual conference.
“Recent developments points to the stabilisation of the parallel exchange rate as a direct result of a cocktail of measures. We should therefore stay the course and foster long-term stability which is necessary for sustained growth.”
The IMF sees Zimbabwe recording 3.5% growth this year.
“The output recovery that resumed in 2021 is expected to continue, albeit at a slower pace, with growth projected at about 3.5% in 2022 and 3% over the medium term in line with Zimbabwe’s growth potential,” the IMF said earlier this year.
Last month, Fitch Solutions, a United Kingdom-based research firm, said Zimbabwe’s economy is this year expected to register modest 2% growth compared to a government forecast of 4.6% due to high interest rates and external factors.
Experts say lower-than-expected agricultural output and a depressed manufacturing sector will weigh down on economic growth prospects as the southern African nation continues to feel external shocks from Russia’s invasion of Ukraine.
Fitch however said economic growth will quicken in the coming year, driven by government consumption ahead of the general elections.