WB forecasts 0,9 percent GDP growth

WB forecasts 0,9 percent GDP growth
Finance and Economic Development Minister, Patrick Chinamasa

Finance and Economic Development Minister, Patrick Chinamasa

THE World Bank (WB) has forecast Zimbabwe’s economy to grow by 0,9 percent this year, significantly lower than the 4,5 percent projected by Finance and Economic Planning Minister Patrick Chinamasa.
In the 2018 National Budget statement released in December, the minister said his ambitious projections would be underpinned by a wave of optimism that has been precipitated by positive signals coming out of President Emmerson Mnangagwa’s new administration, which shot to power in November.
The WB’s report entitled Global Outlook, Broad-Based Upturn, Will it last?, differs with a string of other reports from influential organisations that have predicted a swift recovery in the country, projecting, instead, that GDP growth would slip to 0,9 percent this year, after expanding by 2,8 percent in 2017.
Growth would remain tepid in the coming two years, the WB said, noting that in 2019 and 2020, the economy would continue to expand at less than one percent.
It places Zimbabwe as the only economy out of 26 low income countries to battle a sharp slowdown during the period, with Harare’s predicament compounded by the fact that while it would grow by 0,2 percent in 2019 and 2020, other weak economies would expand at rates well above two percent.
Growth would be generally flat in the other low income markets, including Afghanistan, Somalia, Haiti, Niger, Burundi and Malawi, the report said.
However, it noted that some of these countries would grow by as much as 7,8 percent (Ethiopia), 4,2 percent (The Gambia) and 5,4 percent in Malawi, between 2019 and 2020.
In the latest report, the Breton Woods institution has demonstrated the reality of the hurdles awaiting Zimbabwe’s new administration, which is already struggling to provide vital social services to its growing population.
Growth in sub Saharan Africa is now projected to soften to 2,5 percent during the period, which represents 0,2 percentage points lower than an earlier forecast made by the WB in June last year, “partly reflecting a softer than expected recovery in Nigeria”.
Mnangagwa replaced long time ruler, Robert Mugabe, who was unpopular for leading the country through 37 years of hardships especially from 2000, and was blamed for stifling vital foreign direct investment inflows through harsh laws that threatened to expropriate private assets.
Mnangagwa’s arrival on the scene heightened expectations of Zimbabwe’s economic revival after years of crises blamed on Mugabe’s disastrous policies. Many experts, including the Havard Business Review, have, however, placed Zimbabwe’s growth in the same league with some of sub Saharan Africa’s high growth markets.
“Mnangagwa’s first actions in office underscore how important he views economic recovery,” the Havard Business Review said in a report released on December 28, 2017.
“Even before announcing his new Cabinet, Mnangagwa installed a key reformist, Patrick Chinamasa, as acting finance minister, tasked with tackling corruption and re-engaging with international institutions to unlock funds to ease liquidity shortages,” it said.
“The President also announced the indigenisation ministry will be disbanded and the programme scaled back. He has proposed reforms, such as tax breaks for mining firms and commercial farmers, aiming to assist export-oriented businesses and earn Zimbabwe much-needed hard currency. Mnangagwa is also taking steps to shift the culture in government towards assisting, rather than inhibiting business,” noted the Havard Business Review.
Commenting on growth in low income countries, the WB said: “An uptick in metals prices, along with a recovery in the agricultural sector, supported a modest rebound in metals exporters, while growth was stable in non resource-intensive countries as infrastructure investment continued. Despite these improvements, regional growth remained negative in per capita terms in 2017. The region is projected to see a moderate pickup in activity, with growth rising to 3,2 percent in 2018 and an average of 3,6 percent in 2019-20, turning slightly positive in per capita terms. These forecasts assume that commodity prices will firm and reforms to address economic imbalances will be implemented. Downside risks include lower commodity prices, inadequate fiscal adjustment, and a faster tightening of global financing conditions.”
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