‘Zim Economy To Record 3,2% Marginal Growth’
Zimbabwe’s economy is set to record marginal increases in gross domestic product (GDP) this year and in 2016 on the back of a planned investment in infrastructure projects, according to a new report released yesterday.
BY NDAMU SANDU IN ABIDJAN, Ivory Coast
“Real GDP is projected to marginally improve to 3,2% in 2015. This projected marginal improvement will be on the back of planned investments in agriculture, mining, communications and other infrastructure projects,” the African Economic Outlook 2015 said.
Real GDP is expected to grow to 3,3% next year, the report said.
The report was a joint effort by the African Development Bank (AfDB), OECD and United Nations Development Programme (UNDP).
But the report warned of persistent deindustrialisation and a growing informal economy.
Statistics from the Ministry of Finance showed that at least 4 610 companies closed between 2011 and 2014 resulting in a loss of 55 443 jobs.
It said over 80% of the workers were employed in the informal sector.
The African Economic Outlook 2015 report said inflation would remain low in 2 915 against the background of a weak domestic demand, tight liquidity conditions and the appreciation of the United States dollar against the South African rand.
“The real exchange rate overvaluation relative to the South African rand has caused a loss in external competitiveness, as it has made imports cheaper than domestically produced goods and exports more expensive,” it said.
AfDB acting chief economist Steve Kayizzi-Mugerwa said the biggest problem of transforming in the medium to long-term for Zimbabwe was the US$ straightjacket which had seen some resorting to barter trade due to the scarcity of the US$.
Ayodele Odusola, UNDP chief economist for Africa, said there were critical areas Zimbabwe had to address to harness the informal sector into the formal economy.
The areas include level of activity, income generating capacity and working conditions.
Odusola said the informal sector should be registered.
“One of the major challenge facing the informal sector is access to credit. We need to help them integrate into the formal economy,” he said.
Zim, Multi-lateral Lenders Strengthen Ties
Zimbabwe is slowly making progress towards mending ties with global multi-multilateral financial institutions.
The Zimbabwean Government has established a committee that is constituted by the International Monetary Fund (IMF), the World Bank, the African Development Bank and the Reserve Bank of Zimbabwe, which will formulate strategies on how the country can clear its arrears.
According to a statement by Finance Minister Patrick Chinamasa last week, the committee will eventually lead to the country being able to unlock presently clogged sources of funding.
Zimbabwe is experiencing a structural regression, with the acceleration of de-industrialisation and informalisation of the economy, and urgently requires significant levels of funding – be it from foreign direct investment (FDI) or funding from these multilateral institutions.
“This strategy is a vehicle for establishing a track record of sound economic management in the country so as to unlock new financing for our development requirements.
“Pursuant to deliberations at the IMF/World Bank spring meetings, it was agreed that a committee be constituted to deliberate on the options that we have to clear the debt. Such a committee was inaugurated on May 4, 2015,” said the minister.
The country is presently in arrears of $1,4 billion to the World Bank, $639 million to the African Development Bank, and $120 million to the International Monetary Fund.
The total external debt stands at $7,1 billion – at least by the close of last year.
The latest development points to a thawing of relations between Zimbabwe and the multi-lateral funding institutions, especially the World Bank and the International Monetary Fund which had clearly stated that it would not be providing funds to Zimbabwe “anytime soon.”