Shame Makoshori,Senior Business Reporter
ZIMBABWE's economy will grow at a much slower pace in 2012, an independent forecast indicated, suggesting a 6,5 percent gross domestic product (GDP) growth this year.
Government has projected a 9,4 percent GDP growth this year.
The International Monetary Fund (IMF) has predicted a 3,5 percent growth during the period.
In a 12-month forecast for 2012 released on Friday, economists at the Harare headquartered advisory firm, Econometer Global Capital (EGC), pointed out several factors that will militate against government's highly ambitious projections unveiled in December 2011.
Implementation of the five-year blueprint, the Medium Term Plan (MTP) is moving at a snail's pace, the stock market has been sluggish while central bank measures announced last month to strengthen the financial sector, together with an unsustainable external debt that will strike US$9,2 billion by year-end, are among the hurdles.
Intense disquiet in Zimbabwe's 236?000 strong civil service, whose job action in January cost the economy an estimated US$1,8 million, together with ever growing inflationary pressures, will dampen previous growth impetus, the researchers said.
EGC forecasts year-end inflation to touch 8,2 percent, against a 5,5 percent government projection, and a 5,8 percent annual inflation projected by the IMF.
"The projected economic growth for 2012 of 9,4 percent may not be attainable given the state of some strategic economic pillars," EGC said.
"The outlined statistics for different sectors tends to conflict with the overall growth rate. Given recent developments following the just announced monetary policy statement, the financial sector cannot grow by 23 percent. Zimbabwe faces a tough calendar year with no convincing policy paper to drive the economy in a desired direction. The MTP (2011-2015) seems to be gathering dust with no sign of implementation as most policy intentions are incapacitated by the debt overhang. It is of no relevance to draft long-term policies when the level of uncertainty is at its all time high. There are already policy reversals in as far as (the) 2012 budget implementation is concerned, with revenue expectations already compromised by the 25 percent surcharge tax which can be revised downwards any time," EGC added.
Finance Minister, Tendai Biti, has projected a 9,4 percent GDP growth in 2012, from nine percent in 2011, driven by a 15,9 percent growth in mining, 13,7 percent increase in tourism, 23 percent in finance and 11 percent in farming.
EGC warned of a bearish outlook for the undervalued Zimbabwe Stock Exchange, which it forecast to close with a market capitalisation of US$4,1 billion, from US$3,7 billion in 2011, "whilst the worst case scenario will see it slumping to US$3,75 billion".
Harare based advisory firm, MMC Capital, had earlier forecast US$3,3 billion market capitalisation in 2012.
"There are very low chances of recording an Initial Public Offer in this calendar year," said EGC.
Inflation, unemployment, capacity utilisation, balance of trade and food supply will be among issues to dominate the economy in 2012.
Zimbabwe's economy would also have to grapple with a restive civil service, which has been demanding a 56 percent pay rise.
The figure is, however, unsustainable given the country's shoe string US$4 billion budget. But critics argue that civil servants are justified given the profligacy by government ministers who have splurged huge sums of money on packs that include top of the range automobiles.
Government has pinned hopes on revenues from the mining sector.
Yet the mining industry is unsettled after significant hikes in royalties and other fees this year, which could discourage growth.
Government has also targeted revenue from alluvial diamond mining for civil servants salaries.
"To depend on diamond revenues to effect salary increments is economically suicidal since the proceeds from the gems seems to be inconsistent in terms of inflows and transparency," said EGC.
"The recent strike by the civil servants has cost Zimbabwe's economy an estimated average of US$1,8 million so far this year, with a projected US$2,1 billion cost to the overall GDP by the end of 2012. The Western sanctions or restrictions are to be renewed as calls for an election gathers momentum; this will continue raising the sovereign risk which will see external debt as at the 2012 year-end sitting at an average of US$9,2 billion from the current US$7,1 billion," said the report.
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