RYAN CHIGOCHE
The International Monetary Fund (IMF) has projected the Zimbabwean economy to grow at a slower pace this year and will expand by 3.5% as economic headwinds such as double digit inflation and wide parallel market premia have persisted.
Zimbabwe registered a GDP growth of 6.3 % in 2021 owing to bumper maize harvests, strong pickup in mining and buoyant construction, the IMF said.
The growth in 2021 prompted the government to project a 5.5% growth this year.
“The output recovery that resumed in 2021 is expected to continue, albeit at a slower pace, with growth projected at about 3½ percent in 2022 and 3 percent over the medium term in line with Zimbabwe’s growth potential,” IMF said in a statement released after the conclusion of its 2022 Article IV Consultation.
Finance and Economic Development Minister, Mthuli Ncube, recently said growth conditions for Zimbabwe’s economy have improved despite headwinds
IMF said at least a third of Zimbabwe’s estimated 16 million people are at risk of famine as a result of high inflation and exchange rate volatility, which has been exacerbated by a bad rainy season.
“Directors recommended further monetary tightening, given the persistently high inflation. In this context, they emphasised the need to increase the operational independence of the central bank, discontinue its quasi-fiscal operations, and improve its coordination with the fiscal authorities,” IMF said.
“Concerted efforts are needed toward greater exchange rate flexibility by allowing a more transparent and market-driven price process. Directors called on the authorities to phase out exchange restrictions and multiple currency practices as soon as conditions permit.”
Zimbabwe’s real GDP contracted cumulatively by 11.7% during 2019-20, according to IMF figures, with inflation reaching 837% in July 2020.
Although the percentage has reduced to around 60%, it remains one of the highest in the region and experts have projected it to soar up above 80% by year end.
However the IMF commended the government for the economic growth in the past two years and also the swift response to the Covid-19 pandemic and for “stronger efforts to address macroeconomic imbalances while prioritising social support”.
