SOFTENING commodity prices on the international market have forced Zimbabwe’s Treasury to cut economic growth projections for this year to 4% from 4.5% as the government’s ambitious plan to build an upper middle class economy by 2030 appear to have been thrown off the rail.
A bullish commodity market after Russia’s invasion of Ukraine war was seen as a boon for Zimbabwe’s mining sector-driven economy which endured two successive years of economic contraction between 2019/20.
The Zimbabwe National Statistics Agency (ZimStat), in September 2022, published gross domestic product (GDP) figures for the period 2019 to 2021, with revealed GDP growth rates of -7.8% and 8.5% in 2020 and 2021, respectively.
The authorities see growth during 2022 being mainly driven by mining (10%), construction (10.5%) and accommodation and food services sectors (56.3%).
“Due to the base effect, global and domestic developments, particularly the impact of high inflation and resultant stabilisation measures on credit and demand, the economy is now projected to grow by 4% in 2022, a further downward revision from the mid-year projection of 4.6%,” Finance minister Mthuli Ncube said.
“In the outlook, the economy is now projected to grow by 3.8% in 2023, compared to the NDS 1 [National Development Strategy] target of not less than 5%, on account of the uncertain global economic outlook and potential domestic adverse factors. However, the average growth rate for the period 2021-23 is estimated at 5.4%, which is in line with the NDS 1 target. In the medium term, GDP growth is projected to improve to about 4.8% and 5% in 2024 and 2025, respectively.”
According to the International Monetary Fund, the GDP growth of the Sadc region is projected to decelerate to 2.5% in 2022, from a recovery of 4.2% recorded in 2021.
South Africa, a major economy in the region, is projected to grow by 1.9% in 2022 and by 1.4% in 2023, with electricity supply constraints and underperforming state-owned enterprises expected to weigh down growth.
Angola’s economic growth is expected to accelerate to 2.9% in 2022, with non-oil sectors of agriculture, construction, and transportation being the main drivers. In 2023, growth is expected to reach 3.5% driven by high oil prices and the strong performance of nonoil sectors.
The 3.8% growth during 2023, Ncube said, will be sustained mainly by mining, construction and agriculture, as well as accommodation sectors underpinned by global economic growth slowing down; favourable international commodity prices; normal to above normal rainfall; stable power supply; tight monetary and fiscal policies; and continued use of the multi-currency.
“The uncertain global economic outlook presents risks to the above projections through continued tapering of international commodity prices. Similarly, the impact of climate change through droughts, floods, cyclones, as well as uneven distribution of rainfall may affect the attainment of the desired targets,” Ncube said.