BY TANYARADZWA NHARI THE World Bank (WB) has projected that Zimbabwe’s gross domestic product (GDP) would grow at a much slower pace this year compared to 2021, after being held back by a less favourable agricultural season.
The southern African country has also been battling to forestall a deadly foreign currency crisis, along with a volatile exchange rate and skyrocketing annual inflation rate.
In its June 2022 Global Economic Prospects report released on Wednesday, the lender forecasted growth at 3,7% this year, compared to 5,8% in 2021.
Economists said besides a less favourable agricultural season, Zimbabwe’s growth had been jeopardised by other factors that include policy flip flops, steep rises in global commodity prices and the conflict between Russia and Ukraine.
Last year’s growth was underpinned by an improved 2020/21 agricultural season and robust international commodity prices.
WB’s new forecasts came after local economists warned last week that Zimbabwe should urgently address the currency crisis.
Economics professors Gift Mugano and Tony Hawkins argued that government was amplifying an already bad situation by sticking to the domestic currency.
“Our currency will die by June,” Mugano projected.
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“We are increasing our debt and we won’t be able to defend our currency. Even the government does not want to use its own currency. They paid bonuses in US dollars, they are paying COVID–19 allowances in US dollars, tollgates are now paid in US dollars. We are not qualified to fight for the Zimbabwe dollar because government itself wants the US$,” Mugano said.
But in an interview with NewsDay Business on Tuesday, Finance minister Mthuli Ncube said the situation was under control.
WB also forecasted subdued growth in the region this year.
“Growth in Sub-Saharan Africa (SSA) is projected to slow to 3,7% this year, reflecting forecast downgrades in over 60% of regional economies. Price pressures, partly induced by the Russian Federation’s invasion of Ukraine, are sharply reducing food affordability and real incomes across the region.
“At just above 1%, per capita income growth in SSA is projected to remain much lower than in other EMDEs (emerging market and developing economies). More people in SSA are expected to fall into extreme poverty, especially in countries reliant on imports of foods and fuel. Fiscal space is narrowing further as governments ramp up spending on subsidies, support to farmers, and, in some countries, security,” the WB said.
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