The Sunday Mail
Business Reporter
Government has done “extremely” well in laying a fairly strong macroeconomic foundations for economic growth, according to economic analysts.
In its latest global economic prospects report , the World Bank expects Zimbabwe’s economy to grow by 3,6 percent in 2023, which is two percentage points lower than the Government’s forecast of 3,8 percent.
Government has managed to bring stability in the economy through measures instituted last year aimed at cooling inflation and exchange rate, which were causing distortions within the economy. The authorities have since vowed to continue with tight fiscal and monetary policy measures to keep inflation under control.
Mr Clemence Machadu, an economist, said last year, the authorities addressed some of the most problematic factors that were causing market distortions, speculative behaviour, rent-seeking tendencies, volatilities as well as price and exchange rate instabilities.
“This has resulted in a strong base upon which the economy can build on to achieve growth and stability,” he said.
The Government’s growth plans ride on the back of the five-year economic blueprint, National Development Strategy 1 (NDS1), running until 2025. NDS1, however, is a precursor to the broader agenda of Vision 2030, which aims to achieve an upper middle -income economy by 2030.
Mr Machadu said the WB’s estimated growth for Zimbabwe in 2023 is actually dynamic in that it is above the global economy’s forecast growth.
“While the global economy is forecast to decline sharply to 1,7 percent from last year’s 2,9 percent, Zimbabwe’s economy has been forecast to actually grow to 3,6 percent from the bank’s 2022 estimate of 3,4 percent,” he said.
In addition to the broader monetary and fiscal tightening measures which have stabilised formal exchange rate markets, the value for money audits in Government procurement processes also played a vital role in ensuring price competitiveness for goods and services acquired by Government, and removed selfish and greedy premiums which were put by some suppliers who were charging usurious prices.
“However, the authorities should try to reconcile the tightening stance with the need to avoid recession, as the economy moves beyond stability and beyond Covid 19,” said Mr Machadu.
Government’s economic growth forecast of 3,8 percent in 2023 will be sustained mainly by mining, construction, agriculture and tourism.
Riding on the back of a stable environment, the mining sector is witnessing various projects that are at different stages of implementation.
The sector has investments worth over billions of US dollars, setting the base for achieving a US$12 billion mining industry by 2023.
Agriculture is set to rebound this year after normal to above-normal rains are forecast, while the construction sector has been supported by Government investments in infrastructure, as well as those within the private sector.
Economist Dr Prosper Chitambara said there are a number of things the Government has done right to maintain the economy on a growth trajectory.
He said these include the improvement of public spending on infrastructure, which is a positive development for the economy.
“There has been significant progress towards liberalisation of the markets of the economy but there is room for further liberalisation. This position was recently highlighted by the International Monetary Fund (IMF),” he said.
Dr Chitambara said normal rainfall patterns will result in a good agriculture season, which will help the sector to improve its contribution to the economy.
“Normal rains will also improve water bodies for hydro-electricity generation as power has been a setback, especially in recent times,” he said.
He indicated that the mining sector is poised to do well, riding on commodity prices that continue firming.
He added that agriculture will be better than last year and the rebound will positively impact other sectors of the economy such as manufacturing.
Last year, Finance and Economic Development minister Prof Mthuli Ncube revised the gross domestic product (GDP) growth target downwards due to increasing inflationary pressures and geopolitical tensions.
Initially, Treasury had forecast growth for 2022 at 5,5 percent but later reviewed it downwards to 4,6 percent.
However, the WB estimates show that Zimbabwe is still outpacing several regional economies.
However, despite maintaining the growth projections, the WB noted that geopolitical tensions; global economic shocks; and rising food, oil and commodity prices have led to a slash in growth targets for most economies, including Zimbabwe.
