Zimbabwe is unlikely to achieve its projected economic growth rate of 2.7 percent next year in the face of falling commodity prices and an impending drought, analysts have said.
Growth in mining and agriculture are expected to anchor the southern African country’s economic growth next year, although revenue expected at $3.85 billion from $3.69 billion this year according to Finance Minister Patrick Chinamasa’s projections in the 2016 budget projections.
Speaking at a parliamentary post-budget seminar today labour economist Godfrey Kanyenze said expecting the economy to grow in the context of declining commodity prices and a possible drought was too ambitious.
“We may actually struggle to do better than this year. It may actually be heroic to assume that we will grow at 2.7 percent given that the conditions are actually deteriorating,” he said.
“You cannot expect to reap the in same season that you sow. Structural reforms will take much longer and we may not be able to realise all the benefits in 2016.”
This year, government revised the economic from an initial 3.2 percent to 1.5 percent following a poor agricultural season. Revenue projections were cut down to $3.69 billion from $3.9 billion as key sectors floundered.
Revenues from tobacco – a top earner of foreign currency in previous years – this season fell 14 percent to $586.4 million. Tobacco output is expected to drop by as much as 20 percent after fewer farmers registered to grow the crop next year coupled with another expected poor rainy season.
Mineral earnings for the nine months to September — excluding diamond revenue — fell 11 percent to $1.26 billion owing to a decline in commodity prices.
“It is quite disturbing that they are expecting growth from agriculture and mining,” said economist John Robertson.
“Of concern really should be government’s expenditure and them putting in place investment friendly measures. With the current restrictions, investing in Zimbabwe is a privilege that one has to pay for.”
The country’s growth prospects hinge on government clearing arrears to international lenders by the first quarter next year to unlock fresh funding for the stuttering economy, analysts said.-The Source