By ETimes
HARARE – Zimbabwe’s gross domestic product (GDP) will grow in the outlook, but not at the most efficient rate considering the aforementioned problems, a local research firm said.
The southern African nation’s economic growth in 2023 is officially projected to slow down to 5.3%, down from an estimated 6.5% in 2022 and 7.8% in 2021.
Previously, the International Monetary Fund projected that the country’s economy would grow by 2.5%. But it revised upward its 2023 growth forecasts for Zimbabwe to 4.1% from the initial forecast of 2.5%.
“The view by the international community that Zimbabwe’s elections were not credible may result in certain policy shifts by the government. Debt resolution may not remain a priority as re-engagement efforts are expected to deteriorate,” First Mutual Wealth said in its third quarter of 2023 Economic Review Investments Outlook.
“Policy uncertainty on the currency front is expected to have the biggest impact on GDP growth in the outlook. Post quarter end, conflicting positions have been announced by the Presidium and Finance Ministries on the mono-currency or multi-currency position, adding to further uncertainty,” said First Mutual Wealth, adding that: “we believe that the best outcome remains a multi-currency environment.”
Banks are hesitant to extend credit into 2025 due to the unpredictability of the new monetary system.
This prudence has limited the amount of money available for long-term investments and raised borrowing prices for both people and corporations.
The mining, agriculture, tourism, wholesale retail, construction, and utilities sectors’ success has been the cornerstone of Zimbabwe’s government’s growth strategy.
“We believe that growth is likely to arise from the mining sector given significant investments that have been made in the sector particularly when one looks at potential lithium exploitation opportunities and growing investments in the gold extractive sector,” reads the report.
“Agriculture is expected to have mixed fortunes given impending El Nino impacts for the 2023 to 2024 season with the wholesale and retail sector likely to be more impacted by exchange rate developments for formal retail shops but general growth is expected when one accounts for the informal retail sector.”