World Bank projects 2,9pc economic growth for Zim

The World Bank has projected Zimbabwe’s economy to grow by 2,9 percent in 2023 at a time the global average growth rate is expected to slow down to 2,1 percent this year.

The World Bank had earlier forecast Zimbabwe’s economy would expand by 3,6 percent from the 3,4 percent recorded in 2022.

According to the World Bank’s latest Global Economic Prospects report, global growth has slowed sharply and the risk of financial stress in emerging markets and developing economies (EMDEs) is intensifying amid elevated global interest rates.

But Finance and Economic Development Minister Professor Mthuli Ncube recently has since changed his projection of Zimbabwe’s expected economic growth from his earlier “underestimate” of 3,8 percent to 6 percent, citing improved agricultural performance and increased electricity availability.

The Government expects to harvest 2,3 million tonnes of maize this year, a 58 percent increase from the previous season, due to favourable rainfall.

In its latest report, the World Bank said Zimbabwe’s GDP would grow faster at 3,4 percent, in 2024 and maintain the same expansion rate in 2025.

Speaking at an Economic and Business Outlook Symposium, organised by the Confederation of Zimbabwe Industries in Harare in April this year, World Bank senior economist for Zimbabwe Ms Stella Illieva said growth in the sub-Saharan Africa region was more promising than the global outlook.

She said rising geopolitical tensions and trade fragmentation elsewhere as well as climate change shocks will result in a significant slowdown of growth.

Weakening economic activities in the global economy will have spillover effects to emerging markets and developing countries, which includes Zimbabwe, she said.

“Aggressive monetary policy tightening to contain high inflation, deteriorating financial conditions, and continued disruptions from the war in Ukraine are the drivers of this worsening economic performance on a global scale,” she said.

In addition, Ms Illieva said the weak growth in global markets will have an adverse effect on the prices of metals and other commodities which Zimbabwe depends on.

“Prices of gold, tobacco, and platinum have been in decline since 2022, this trend is expected to continue this year, at least for gold and tobacco,” she said.

Presenting the 2023 national budget last November, Minister Prof Ncube projected the country’s economy to grow by 3,8 percent this year, driven by favourable international commodity prices, a good agricultural season, and tight monetary and fiscal policy.

According to the report, growth in Sub-Saharan Africa is projected to slow to 3,2 percent in 2023, as external headwinds, persistent inflation, higher borrowing costs, and increased insecurity weigh on activity.

Growth in South Africa, Zimbabwe’s largest trading partner in Sub Sahara Africa is projected to slow sharply to 0,3 percent this year, a 1,1 percentage point downgrade from January.

The drag from the abrupt slowdown that started late last year and continued into early 2023 amid widespread power outages is expected to weigh heavily on the recovery.
-herald