Mthuli Ncube finally addresses Parliament on the State of the economy

MINISTERIAL STATEMENT

STATE OF THE ECONOMY

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE):  Thank you Mr. President and thank you Members of the Senate for this occasion to present to you a report on the state of the economy.  This is a short report because I will have other opportunities to present a much longer report during the budget statement but also in my interactions with you and Members of the Lower House in Bulawayo next week. This statement is a statement about the state of the economy rather than policy pronouncements about what I will be doing going forward. I have reserved those for the Budget but as I speak, I will signal the policy direction as well.

In order to put the state of the economy into context, I want to share with you the state of the global economy and this is important. We are seeing strong growth of the order of 3.7% this year and the same figure next year. This is being driven by mainly strong growth in North America, mainly United States after the cutting of taxes by the Executive in that country and strong growth that we have seen in what we refer to as emerging markets which really referred to the large  developing countries which is China and India – with China showing growth of the order of 6.5% this year and slightly lower at 6.2% in 2019 and India growing faster with projection growth levels above 7.3% this year and similar figure next year.

I am happy to leave a document behind so that all these numbers are clear. I have got a table showing that. This recovery in growth and you will see where I am going with this when I come to Zimbabwe. Globally, it is stopping commodity prices from collapsing. Basically strong growth from China and India are good for commodity prices and Zimbabwe is exposed to those commodity prices.  I must say that when it comes to oil, it is not so good because with the oil price averaging $75 per barrel, that is not good for us because we are a net oil importer but it is good for other African countries that are net oil exporters.

Within Africa and the region itself, we see growth in Zimbabwe hovering around 6.3%. We have revised it upward from 4.5%  which we thought would be the growth this time last year but we have revised it upwards because we see more robust factors impacting the economy positively. It is not surprising therefore to see the interest in foreign investors coming through to Zimbabwe Investment Authority which will become a one-stop-shop soon. With 165 applications worth US$15.8bn in the first half of 2018, we noticed that in terms of foreign direct investment, US$1.8bn has been confirmed this far, 2018 and we are desirous that this figure moves up to US$2bn in 2019. This interest shows that foreign investors see dynamism in this economy and certainly our growth prospects augur well for the returns of the investors who are showing this interest.

Where is this growth coming from? It is being driven by the mining sector growing at about 26% currently. I am still concerned though about some of the developments in that sector where we are seeing the currency shortages beginning to impact the sector in this last quarter of the year. I still expect very strong growth from the sector. The other driver is the construction sector which is growing at about 14% and as you are well aware, the RBZ has a construction sector fund that seeks to support this sector going forward.

Finally, the third strong growth sector is agriculture growing at 12.4% and we know quite a bit – some of you here are beneficiaries of strong agricultural sector programme which seeks to drive food security in Zimbabwe but also earn much needed foreign currency within the country.

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