LIVINGSTONE MARUFU
Zimbabwe’s already troubled economy will fall short of the government’s projected growth of 3.8% this year due to a number of factors, experts have said.
This comes on the back of high inflation, forthcoming harmonised elections, crippling power cuts, acute shortages of foreign currency and lack of investment among a plethora of other challenges.
Analysts believe Zimbabwe’s gross domestic product (GDP) growth will slow to less than 3% and their projection comes at a time the International Monetary Fund has also projected a 3.6% growth for Zimbabwe this year driven mainly by the mining, construction, agriculture and accommodation sectors.
“…We foresee significant productivity constraints associated with capital constraints, policy shifts and electricity shortages. As a result, we estimate GDP growth in 2023 to be at 2.5%,” a Morgan & Co Research’s latest report reads in part.
“Zimbabwe has gone through episodes of economic recessions and the political environment has not changed given that international isolation, uncompetitiveness, corruption and a colossal debt overhang remains.”
“However, 2023 is an election year for Zimbabwe and it will be characterised by volatility.”
The Zimbabwe National Chamber of Commerce chief economist, Jeff Makiwa, said it will be difficult for Zimbabwe to achieve GDP growth of 3.8% and the economy was projected to expand by 3% this year when “considering all the downside risks”.
“Persistent inflation would entail continued tightening of the financial conditions thereby further raising the cost of capital.
“The rapid depreciation in the local currency against the US$ coupled with lower financial inflows may increase the debt distress levels.
“Losses and damages as a result of climate and other shocks from extreme adverse weather conditions could affect agricultural production and push more citizens into the extreme poverty bracket.”
He said resolving power woes would be crucial going forward.
Zimbabwe has been experiencing load shedding lasting more than 12 hours a day leading to loss of production.
However, Confederation of Zimbabwe Industries president Kurai Matsheza said the target was achievable.
“I can’t say the actual economic growth projection but there is a chance of achieving Treasury’s 3.8% economic growth projections.
“Some of the factors that will drive growth are agricultural output as with the current rain patterns, currently pointing to a good season, the mineral commodity prices seem to hold in terms of global prices with Zimbabwe only needing to maximise on output.
“The electricity challenges are the major ones against achieving growth.
However, with good inflows into Kariba and successful commissioning of units 7 and 8, the impact may be contained,” Matsheza said.
