Old Mutual reaffirms Zim growth forecast

Old Mutual Investment Group (OMIGZIM), a unit of Zimbabwe’s biggest financial and property firm, Old Mutual Zimbabwe Limited, has reaffirmed its prediction that the economy will register further growth this year despite threats from external shocks.

The group, the largest investment management firm in Zimbabwe, said the growth in the economy was characterised by growing output from the manufacturing sector driven by strong demand.

“Growth is being driven by strong performance in 2021 of major sectors including agriculture and mining and election spending.”

The investment group noted that investments in the economy towards the end of last year would start bearing fruit this year, hence the investment managers’ bullish growth forecast.

The group added that its own strategy until year-end would be centred on green shoots from selected companies, while overarching positions remain defensive and long term in nature The investment group said earlier in January this year that output from agriculture, after the bumper harvest of 2021, would be lower than prior year given the impact of adverse weather conditions.

Nonetheless, the investment maintained that Zimbabwe’s economy was still expected toregister strong growth in 2022 on account of buoyant activity in the construction andservice sectors.

Finance and Economic Development Minister Professor Mthuli Ncube projected in his 2022 National Budget that the economy would grow by 5,5 percent this year spurred by agriculture, mining and tourism.

The Treasury chief projected that the economy would grow by 5,5 percent although some analysts and the International Monetary Fund believe the margin of growth will be lower than that.

The World Bank has also indicated projected a lower growth rate, at 3,7 percent this year, citing likely reduced agricultural output and resurgent inflationary pressures, but Treasury sees higher growth at 5,5 percent.

But the Bretton Woods institution is seeing a difficult juncture saying the economy was on a declining path.

“This year’s growth is expected to be lower than 3 percent, around 2,5 percent due to rising inflation both globally and locally and the potential resurgence of the Covid-19 pandemic which causes the government to impose lockdowns,” World Bank senior economist Stella Illieva said.

Economic growth, Ms Illieva said, remained fragile due to low levels of inflationary pressures, high indebtedness, volatility of commodity prices as well as low vaccination rate which may amplify the situation in case some new variants return.

“In line with the regional and global developments, the country’s economy will not reach pre Covid-19 pandemic level,” she said.

The IMF on Tuesday kept its 2021 economic growth forecast for Zimbabwe unchanged at 3,5 percent. Previously, IMF staff said despite a pickup in the services sector, the southern African nation’s economic growth would slow down in 2022 to 3,5 percent and about 3 percent thereafter in line with its current potential.

However, President Mnangagwa, in his keynote address at the 42nd Independence Day commemorations in Bulawayo on Monday, reiterated that Zimbabwe’s economy would grow by 5,5 percent.

“In 2021, the economy grew by 7,4 percent, while in 2022 it is projected to grow by 5,5 percent, leveraging on the peaceful environment, increased production and productivity;
infrastructural development, a buoyant mining sector as well as a recovering tourism and hospitality industry,” he said.

Reserve Bank of Zimbabwe Governor Dr John Mangudya yesterday told a corporate governance colloquium that economic growth was between 7,4 percent and 7,8 percent in 2022 and would remain strong at 5,5 percent this year despite strong domestic and external headwinds.

“The economy continues to show strong optimism in 2022 with the Purchasing Managers’ Index produced by ZimStat at 50,7 percent in the last quarter of 2021, representing a 10 percentage point increase from 40,7 percent recorded in the third quarter,” Dr Mangudya said.

“Despite lack of external credit and foreign direct investment as well as the devastating effects of Covid-19, most sectors of the economy have shown great resilience reflecting the importance of the domestic financial sector. In the manufacturing sector, capacity utilisation rose to 66 percent…, up from 47 percent in 2020,” the RBZ Governor added.-The Herald