RESERVE Bank of Zimbabwe governor Gideon Gono has revised his gross domestic product forecast for the year from the initial 3-5% in the fourth quarter review to 2-2,5%.
In his monetary policy review statement yesterday, Gono attributed the revision to the decline in agricultural production, which had been projected to contribute to overall economic recovery of the country.
He said the decline in the rainfall pattern and drought would slow economic growth.
“Reflecting the dominance of agriculture in the country’s productive systems, the unfolding drought is expected to limit the forecast GDP growth to an average real rate of 2-2,5%, down from the previously forecast 3-5%,” Gono said.
“There are distinct correlations between droughts in Zimbabwe, the overall adverse performance of the economy and inflation, which ought to guide turnaround policy priorities to promote food security and overall reduction of inflation,” said Gono.
The central bank introduced a turn around strategy at the beginning of 2004, with policies on infrastructure, exchange rate management and financial sector discipline.
The move to control fiscal expenditures has seen inflation declining from a high of 622,8% in January to 129,1% in April this year.