By ETimes

Zimbabwe maintains its economic growth forecast for this year at 7.8% after an estimated 5.3% contraction last year, Finance and Economic Development Minister Mthuli Ncube said on Thursday.

This rebound comes after a good 2020/21 agriculture season, higher international mineral commodity prices, a stable macroeconomic environment that facilitated domestication of some value chains and better management of the Covid-19 pandemic.

The southern African nation’s economy contracted cumulatively by about 11% during 2019-20 owing to the combined effects of the pandemic, cyclone Idai, a protracted drought, and weakened policy buffers, according to the International Monetary Fund (IMF).

But, this year’s economic growth estimates by the Zimbabwean government are in sync with that of the IMF.

The IMF acknowledged that economic activity is recovering in 2021 with real GDP expected to grow by about 6%, reflecting a bumper agricultural output, increased mining and energy production, buoyant construction and manufacturing activity and increased infrastructure investment.

On the other hand, Zimbabwe’s GDP growth projections are much higher than that of the African Development Bank (AfDB) and the World Bank (WB). AfDB sees Zimbabwe GDP growth at 4.2% in 2021 and 3% in 2022 if effective measures are taken to stabilize foreign exchange and avoid excessive money creation. It is higher than the 2.9% growth anticipated by the World Bank in 2021.

In his budget speech, Ncube said main sectors driving growth are agriculture, manufacturing, electricity, accommodation and food services, as well as construction.

“In 2022, the economy is projected to grow by 5.5%, underpinned by higher output in mining, manufacturing, agriculture, construction as well as the accommodation and food services (tourism) sector,” he said.

The underlying assumptions for the projected growth include normal to above normal rainfall pattern, subdued Covid-19 pandemic, relatively stable exchange rate and declining inflation. Also favourable international mineral prices.

He said potential risks to the above projected growth include the uncertainty in the future path of the pandemic and exchange rate volatility, which may contribute to high inflation.

“Other risks relate to under performance and viability of some of the State-Owned Enterprise (SOEs), extreme weather conditions, retreat in international commodity prices and higher than anticipated international oil prices.”

Initial GDP forecast for 2021 was 7.4%.

Analysts say the maintained growth will be a litmus test considering that the currency is facing soaring food prices and currency conundrum – Harare

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