‘Up, down, then up again’ – IMF revises Zim’s GDP growth outlook to 6%

  • GDP projection reviewed upwards from 3.1%
  • Growth expected to be driven by improved agricultural output, manufacturing and construction
  • The World Bank also recently scaled up their projection citing the same reasons

The international Monetary Fund (IMF) has lifted its projection on Zimbabwe’s economic growth to 6% this year from a previous forecast of 3.1% set in April.

The April projection was a downward review from 4.3% initially projected in October 2020, a slash down based on a cocktail of Covid-19 lockdown measures, currency volatility, high inflation, wage erosion, shortages of foreign currency, reduced capacity of businesses, and company closures.

However, the IMF now believes that, the good farming season and higher farm produce output experienced this year as well as a recovery in energy production, manufacturing and construction will bolster Zimbabwe’s economy past its initial projections.

“An economic recovery is underway in 2021, with real GDP expected to grow by about 6%, reflecting a bumper agricultural output, increased energy production, and the resumption of greater manufacturing and construction activities,” they said in a statement.

Zimbabwe’s biggest agricultural commodity, tobacco, has so far this year managed to rake in an impressive US$421 million in earnings compared to only US$303 million within the same period last year.

Other important agricultural products such as maize and wheat are expected to post record-breaking volumes his year.

The Ministry of Finance and Economic development cites pretty much the same drivers for its 7.4% growth projection which it has refused to revise despite all the counteractive factors such as the possibility of a third wave of the COVID-19 pandemic.

The World Bank also share the same vision, which has seen them also reviewing their initial projection for the country’s GDP growth from 2.9% to 3.9%.

“Economic growth this year will be led by recovery of agriculture as rains normalize, businesses adjust to limitations caused by the COVID-19 (coronavirus) pandemic, and inflation slows down. However, disruptions caused by the pandemic will continue to weigh on economic activity in Zimbabwe, limiting employment growth and improvements in living standards,” they stated, echoing the IMF in their Zimbabwe Economic Update (ZEU).

Furthermore, the IMF also concurred with the World Bank saying that deliberate attempts to contain the nation’s budget deficit, tame reserve money growth and the introduction of a foreign-exchange auction system were a sign that Zimbabwe is moving in the right direction even though “further efforts are needed to solidify the stabilization trends and accelerate reforms.”

They however, cautioned that their projection was heavily dependent on the evolution of the COVID-19 pandemic as well as the pace of vaccination roll out in the country.

Zimbabwe is currently fighting to prevent the emergence of a third wave of the pandemic in the country, a fight which saw the Vice president and minister of health tightening lockdown measures with effect from the 14th of June.

The country has a target of achieving herd immunity (having 10 million people fully vaccinated) by the end of this year but as of the 16th of June only 423 474 people had been fully vaccinated against the Corona virus.

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