MONA LISA DUBE
The World Bank has warned of a gloomy outlook in prospects of economic recovery for Zimbabwe citing the global economic shocks that will not spare Harare, already reeling from multifaceted challenges.
World Bank country manager for Zimbabwe Marjorie Mpundu told Business Times that Zimbabwe will not be spared from the current global economic shocks stoked by the Russia-Ukraine conflict and the Covid-19 pandemic.
“For 2023, we were hoping to start with a very bright picture on the economy. But looking at it right now it doesn’t look very good, it looks gloomy,” Mpundu said.
She added: “We have just released our World Bank global economic prospect report, and what it is showing is that global growth will slow down from 2.9 % in 2022 to 1.7% in 2023. This growth will be the third weakest.”
“The first time we saw this was in 2009, the second in 2020 due to the (Covid-19) pandemic. This will be the third time in nearly three decades mainly due to monetary policy tightening to contain very high inflation.”
The Russia-Ukraine war has disrupted global economic activity through the rising energy and food prices. These have caused very high inflation across the global economies with central banks responding by raising interest rates, Mpundu said.
“High interest rates have dampened economic activity and contributed to capital flight from the emerging markets, weakening their domestic currencies and if you look back at what happened with the Covid-19 pandemic in the last two years, those disruptions have an impact we are still seeing.”
Zimbabwe is faced with economic challenges due to several factors including sanctions imposed by the west, corruption by the political and business elite, impact of the Covid-19 pandemic among others.
Zimbabwe is making frantic efforts to normalise relations with previously hostile western countries and pay back huge debts to multilateral institutions including the World Bank and the African Development Bank, among others.
With elections expected this year, Finance Minister Mthuli Ncube has warned of economic shocks usually associated with holding of polls.
Mpundu said Zimbabwe has to institute some political reforms “for assistance to be given”.
She said Zimbabwe has been trying in vain to address the necessary reforms adding the latest failure came last year.
“The Zimbabwean government is trying to address these reforms and in 2015 we almost reached an understanding but it didn’t work out. Last year we came very close again but it also didn’t work out,” she said, adding that the issue of sanctions imposed on Zimbabwe had nothing to do with the World Bank’s relations with Zimbabwe.
“We do not follow bilateral sanctions. It has nothing to do with sanctions for us but all about arrears owed to us and our sister institutions,” she said.
She warned that Harare will likely be haunted by the global economic crisis that is set to worsen an already precarious situation.
“Let me step back and look at 2022. The economy last year is estimated to have grown with a real GDP growth of over 3.4%. Our latest projections show that there will be some economic recovery going on in Zimbabwe, a little higher than what we’re seeing on the global side but this is likely to slow down,” she said.
“If you look at the global prospects report that we just released, we have a number there for Zimbabwe but we have to watch closely to see how all these global shocks are impacting Zimbabwe including the climate change shock.”
“So in 2022 you look at the economic growth (and) what drove that economic growth was the mining, the recovery of tourism, and other services that were previously affected by the pandemic.
“However, as I said the multiple and interconnected global shocks contributed to the slowing pace of the economic growth here in Zimbabwe and increased the price and exchange rate volatility.”