The Sunday Mail
Editor’s Brief
Victoria Ruzvidzo
THE World Bank has just released the Zimbabwe Economic Report in which it has given a positive outlook on the trajectory of the local economy, projecting a 3,9 percent Gross Domestic Product (GDP) figure for 2021 which it expects to rise to 5,2 percent next year.
Although the figure for this year is lower than the 7,4 percent the Government projects, the WB estimate is positive on many fronts.
The World Bank is usually very conservative and quite blunt in its assessment and for the institution to note such growth is a big endorsement for the economy.
Although it dished quite a bit of reservations in some aspects in its latest report, it acknowledged current efforts to rejuvenate the economy.
At a time when most economies around the world were losing on gains made, especially pre-pandemic and are reeling from the negative multilateral effects of the pandemic, the report acknowledges the efforts made especially in the implementation of measures and foreign currency reforms that have stabilised the economy at large and set it on a path of recovery and growth.
While there is a disparity between local and World Bank projections, it is encouraging to observe the positive outlook predicted and expected by both parties.
Indeed, the recent gains made in the local economy have been there for all to see with increased positive economic activity, formulation and implementation of measures and reforms that have resulted in a much better performance by the Zimbabwe economy and are yielding notable and most welcome results.
Previous economic reports and projections by the World Bank have been largely doom and gloom amidst a myriad of challenges that the country and economy have faced.
The story has changed and is ever changing.
Credit has to be given to a determined and robust approach to fix and transform the local economy and improve the lives of ordinary Zimbabweans who have been battered and bruised by the Covid-19 pandemic and other economic challenges the country has faced.
The Bretton Woods institution projects that economic growth this year will be led by recovery in agriculture and business’ ability to adjust to limitations caused by Covid-19. The slowing down of inflation is a huge plus for this economy as it stabilises things.
The National Development Strategy 1 (NDS1) will be instrumental in giving impetus to the economy.
However, it was interesting a few days ago that the Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya differed with the World Bank on inflation projections for the economy, with the global lender giving a more conservative 86 percent figure by year end.
Although still very much a positive outlook, the central bank governor was vehement Zimbabwe would do better and manage a 55 percent figure come year end.
This is a great debate which we find quite progressive.
Zimbabwe used the base effect when calculating inflation.
This refers to the choice of a basis of comparison or reference can have on the result of the comparison between data points while the WB bases projections on annual average inflation.
But there is total agreement that inflation will go down as has been the trend of late as reforms and policies are yielding positive and notable results.
Inflation eased to 162 percent in May from 870 percent in July last year. This is a major achievement by any measure.
The WB report noted that the Government’s ability to respond to the pandemic has been hugely affected by limited access to sources of finance, unlike other countries who have benefited from funds allocated to help fight and reverse effects of the pandemic
A corrective monetary response did much to ease economic volatility and also avail funds, though not as much as required, that have helped the country fight the socio economic effects resulting from the pandemic, at a time when international financial institutions were reluctant to extend funds to Zimbabwe.
Zimbabwe has been fighting and is winning a lone battle, putting in a much better performance than other nations that are benefiting from financial packages availed by these international financial institutions.
The arresting of quasi fiscal activities has also helped much to make funds available and directed towards fighting the pandemic and transforming the Zimbabwean economy.
Business needs to align with Government policy now more than ever as this report clearly shows the positive impact these policies are having on the economy.
When the Government introduced tough reforms that eased volatility of prices and exchange rate, businesses went up in arms attacking the Government for such reforms.The same reforms that have been acknowledged by the World Bank and reforms that have stabilised the local economy and are responsible for the growth of the economy .
There is more scope for Government and business to sit down to talk and work hand in hand to create and implement measures and reforms that will benefit the local economy and achieve the desired results we are working so hard to attain.
A good number of these measures Government is coming up with are unsavoury to a good number of businesses but also just what the doctor ordered if we are to achieve our economic targets.
Most companies have only focused on making super profits albeit, illegally, by flouting financial regulations and being involved in highly corrupt activites that have hurt the local economy, fuelled inflation and worsened the plight of ordinary Zimbabweans.
Sacrifices have to be made for the greater good of the economy and the benefit of all and business has to be aligned, come to the party and be willing to suffer a little in order to gain much.
There has to be discipline in the financial sector and an acceptance of reforms in policies such as the famous or is it infamous SI 127 introduced to foster discipline.
Year on year inflation is projected by the Reserve Bank to go down to levels below 55% and this has been made possible by these tough reforms. Hence a more collective effort has to be advanced to build on what have been notable gains and improvements within the economy.
The seeming resistance to SI 127 particularly is not helping matters.
We must all strive to maintain the stability the economy has enjoyed over the past few months.
Closer interactions between the two parties should produce an amicable environment.
The Confederation of Zimbabwe Industries recently said SI 127 was good but would have unintended consequences. This statement alone means CZI and all stakeholders should ensure the intended consequences have the upper hand at the end of the day.
Lets build on current achievements and ensure by year-end Zimbabwe emerges the winner!
In God I Trust!
