Sunday, June 10, 2018

Economy to grow 7pc: ZIA

Tawanda Musarurwa
The Zimbabwean economy should grow by 7 percent annually over the next few years, Zimbabwe Investment Authority (ZIA) chief executive Mr Richard Mubaiwa has said.
He said this was on the basis of positive indications on key economic fundamentals being experienced.
The country’s economy, according to World Bank figures, has been growing on an average of about 3,6 percent, but with the policies enunciated by the new economic order, figures of up to 7 percent are now being taunted.
“Whilst we experienced a downward spiral in the last few years, we are now beginning to see an increase in the rate of growth of the economy. And the projections are continuing to grow.
“We are projecting that we can grow at an average of about 7 percent per annum in the next few years,” he said.
Zimbabwe’s gross domestic product (GDP) growth is largely expected to be buoyed by the performance of the mining, agriculture and manufacturing sectors.
The African Development Bank (AfDB), in its Zimbabwe Economic Outlook 2018, says, “A modest recovery in international commodity prices is projected to spur growth in mining. Energy production is expected to improve following the completion of the Kariba South Extension Plant in December 2017.
“Agricultural output growth will be supported by scaled up co-ordination and funding from the Government and the private-sector. There will also be great investment in irrigation development. Agriculture is expected to grow strongly in 2018 due to good rainfall and targeted support to farmers.
“Manufacturing is likely to see growth on the back of a protectionist policy to support local industry. This intervention resulted in significant increases in capacity utilisation in local industry, from 34, 3 percent in 2015 to 47, 4 percent in 2016, before declining to 45, 1 percent in 2017.”
Other observers project the Zimbabwean economy to grow by at least 6 percent next year.
“Our projection is that the economy will likely grow by between 3 percent and 3, 5 percent in 2018 and will likely plateau at 6 percent in 2019 given the country’s GFCF trends,” said Akribos Research Services in its ‘Zimbabwe Playbook 2018’.
The analysts, however, maintain that funding will be critical in the long-term if the Zimbabwean economy is going to maintain the growth momentum.
Funding will likely be the biggest risk for the economy as it seeks a new growth path in a new economic order. China and the Bretton Woods Institutions may play a considerable role in the supply of the required funding. The United Kingdom cannot be discounted as it is seeking new partnerships after the Brexit,” they said.
Earlier this week, the World Bank gave an upward review of the local economy’s growth projection for this year.
The Bretton Woods institution revised Zimbabwe’s GDP growth projection to 2, 7 percent from the 1, 8 percent it had projected at the beginning of the year.
The revised growth rate is, however, still lower than the 3, 4 percent it projected for 2017.
There has been renewed interest in the country by a number of investors responding to favourable policies being enunciated by the new dispensation.
To date, there has been over US$16 billion worth of investment commitments made.
The majority of them are likely to be concretised soon after the July 30 elections.