By Stanely James Business Editor
GROSS Domestic Product (GDP) growth in Zimbabwe is projected to reach 3.9 percent in 2021, a significant improvement after a two-year recession, according to the World Bank Zimbabwe Economic Update (ZEU) launched today.
The world bank is predicting Zimbabwe’s economy to register a modest recovery, however treasury has set an overall economic growth of 7.5 percent.
In its latest update on the Zimbabwean economy, the Bretton Woods Institution states that while the economy is on course to recovery there are some challenges that needs to be addressed.
“Economic growth this year will be led by recovery of agriculture as rains normalise, businesses adjust to limitations caused by the COVID-19 (coronavirus) pandemic, and inflation slows down. However, disruptions caused by the pandemic will continue to weigh on economic activity in Zimbabwe, limiting employment growth and improvements in living standards,” reads the report.
While acknowledging that the agriculture sector will play a critical role in economic recovery the world bank hinted on macro economic stability as key to development.
“Economic growth this year will be led by recovery of agriculture as rains normalise, businesses adjust to limitations caused by the COVID-19 (coronavirus) pandemic, and inflation slows down. However, disruptions caused by the pandemic will continue to weigh on economic activity in Zimbabwe, limiting employment growth and improvements in living standards,” the report reads.
It also predicted a positive economic growth rate of over five percent in 2022.
“The ZEU notes that economic recovery is expected to strengthen further in 2022 with GDP growing at 5.1 percent as the deployment of vaccines intensifies and implementation of National Development Strategy 1 (2021-2025) bears fruits.”
The report revealed progress that has been attained by the government in restoring economic confidence. An agressive vaccination programme, stable economic policies and a resurgent manufacturing sector have all lead to positive indicators of economic growth.
With a quarterly report by treasury showing government attained a budget surplus of over nine billion Zimbabwe dollars , the move has also seen experts being confident of positive growth rates. A bumper harvest is also being expected to boost local demand, sustain manufacturing entities and stabilise prices. With year on year inflation being on a slowdown trend, the modest recovery in economic activity by the World Bank is coming when government is also focusing on a private sector led economy.
This is the third economic update for Zimbabwe produced by the World Bank.
The ZEU, Overcoming Economic challenges, Natural Disasters, and the Pandemic: Social and Economic Impacts, provides the World Bank perspective on macroeconomic and poverty developments and discusses ways to strengthen public service delivery in key sectors.
Economic Updates are a standard World Bank tool for macroeconomic and fiscal monitoring.
“Improving the country’s growth prospects will require further attention to policies that strengthen the quality of service delivery in the social sectors. Preserving lives during an unprecedented that protects livelihoods, strengthens social protection, improves food security, and ensures better education outcomes,” said Mukami Kariuki, World Bank Country Manager.
Facing tight public finances and limited recourse to external financing, Zimbabwe will need to rely mostly on reallocating domestic resources to optimal public uses and leveraging private financing and humanitarian support where possible. Addressing underlying challenges in health, education, social protection, and food security will require sustained financing, strengthened accountability frameworks and investments in appropriate management information systems.
The ZEU reviews developments in 2019 and 2020; and emerging trends in 2021. Part One of the ZEU provides an overview of the macroeconomic and poverty context. Part Two assesses the impact of COVID-19 and other exogenous shocks on delivery of basic services to the poor and proposes mitigating actions for discussion. It also summarizes key policy options needed to stabilize Zimbabwe’s economy, minimize the social costs of the transition, and prepare for an economic recovery.