African Development Bank says Zimbabwe economy will only grow by 1 percent

Zimbabwe’s economy is expected to grow by one percent this year, picking up to 1.2 percent in 2019, the African Development Bank has said in its latest African Economic Outlook report.

The AfDB’s projection mirrors that of the World Bank which expects a 0.9 percent growth, much lower than the Zimbabwean authorities estimate of 4.5 percent growth.

According to the report, the southern African nation economic performance in 2018 is likely to be affected by political changes.

“The 2018 elections are likely to put further pressures on the budget, and the government is resorting to domestic borrowing to cover the budget deficit,” reads the report.

The southern African country’s economy continues to face structural challenges from the high informality, weak domestic demand, high public debt, weak investor confidence and a challenging political environment, said AfDB.

According to the report, a recovery in international commodity prices is projected to spur growth in mining and energy production is expected to improve following the commission of the first unit of the Kariba South power plant.

“Agricultural output growth will be supported by scaled up coordination and funding from the government and private-sector and greater investment in irrigation development,” reads the report.

Manufacturing is likely to grow on the back of a protectionist policy to support local industry.

In 2016, government gazetted Statutory Instrument (SI) 64 of 2016, effectively banning the importation of certain products without prior clearance in a bid to support local industry.

“This intervention resulted in significant increases in capacity utilisation in local industry, from 34,3 percent in 2015 to 47,4 percent in 2016, before declining to 45,1 percent in 2017.” – The Source

(124 VIEWS)