Why MDC Alliance’s $100 billion economy is impossible in 8 years

Former Finance Minister Tendai Biti who is now a member of the MDC Alliance says if elected into government the coalition government can grow Zimbabwe’s economy from the current $15 billion to $100 billion in 8 years. Zimbabwe fact-checking organization, Zimfact, says this is impossible. Using Biti’s growth rate, it will take 25 years.

MDC Alliance principal and former Finance Minister, Tendai Biti, has repeatedly claimed that, if elected into government, the opposition coalition would propel Zimbabwe to a $100 billion economy in eight years.

Biti told an MDC Alliance rally in Murehwa on 24 March 2018, that the $100 billion economy target could be reached in under eight years.

He repeated the claim in a recent interview with 263Chat:

263Chat: You are on record speaking about a 100 billion (dollar) economy…

Biti: Yes! That’s the vision, that’s achievable, that’s achievable. We will build a hundred-billion-dollar economy in eight years on the back of a growth rate of 8.5 percent economy (sic) anchored on five things.

Number one, macroeconomic stability, this government can’t run the economy… We have got a budget deficit right now that is 30 percent of GDP.

Number two, leveraging the mining sector, which can create billions and billions of dollars. We lost $15 billion in three years, from diamonds. One mineral alone. So, we’ll leverage the mineral sector.

We’ll leverage our agriculture, the agro-industrial transformation of our country. We’ll leverage the low hanging fruit that is tourism. We’ll leverage – and this is very key – the infrastructure…the gross capital formation, rebuilding of roads, dams, our transport network and in eight years we will have a hundred-billion-dollar economy. It’s very possible, it’s very easy and, in fact, as I’m talking to you right now, we are actually working on our economic models on the kind of thing we will expect from livestock, the kind of thing we will expect from tobacco in the economic model that will produce that hundred-billion-dollar economy. That’s a vision, that’s a vision and we’re going to achieve that.

 Zimbabwe’s official 2018 budget statement, presented on 7 December 2017, estimates that the country’s real gross domestic product was $14.5 billion. It projected real GDP to reach $15.2 billion this year.

Using the geometrical growth calculation formula Yt = Y0(1+r)t  – Zimbabwe’s $15 billion economy – growing at 8 percent (or 8.5 percent for that matter), cannot possibly amount to $100 billion.

Instead, growing at 8 percent annually for the next eight years, the economy would grow to just under $28 billion, as illustrated below:

$15 billion (1+0.08)⁸=$27.76 billion

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