World Bank sees GDP growing at a higher rate to government own estimate

Harare – In a January 2019 report, World Bank forecasts a higher GDP growth for Zimbabwe in 2019 at 3.7% which is ahead of the revised 2018 forecast of 3%. This is the highest GDP forecast for Zimbabwe by the bank since 2015.

In January 2018, the Bank forecasted a marginal 0.6% growth rate for Zimbabwe for the respective year, while projecting an even slower growth for 2019 at 0.2%.

Typically Bretton Wood institutions have historically posited lower projected growth rates for Zimbabwe when compared to government’s own projections and of the 2 that is the World Bank and IMF, the former has historically been more conservative.

In 2018, IMF projected a growth of 3.6% which was more bullish when compared to World Bank and closer to government’s own 4.5% initial target.

In successive months Zimbabwe was to revise upwards its GDP growth for 2018 to 6% and later back again lower to 4% around the 4th quarter of the year.

For 2019, Zimbabwe forecasts its GDP growth to slow down to 3% according to the National Budget delivered in November 2018. This growth was again a revision from 9% growth forecasted in the 2-year Transitional Stabilisation Program released in October.

It is key to highlight that these shifts in forecasts particularly by the Zimbabwean government in a space of 1 month between October and November, were necessitated by fundamental shifts in the economy in that respective period.

With inflation spiking sharply from 5% in September to 21% in October, it was quite apparent that the growth momentum in the economy could not be sustained into 2019. With government moving to suspend a 2016 SI which protected local industry to allow for imports, local production was headed for a sharp retreat.

The fundamental driver of the inflation being the absence of adequate forex in the economy against a buorgeoning local credit. The economy has an estimated lag in foreign obligation amounting to $900 million.

The key drivers of growth for 2019 remains the mining sector the agric sectors respectively. The respective sectors benefited from a record Tobacco and Gold output. The outlook on agric may however be dampened by erratic rainfall in the 2018 to 2019 season.

The mining sector has likewise been hamstrung by currency developments which lowered their adjusted receipts.

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