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GDP in shock downturn

ZIMBABWE’S gross domestic product (GDP) is expected to shrink more than the Reserve Bank of Zimbabwe (RBZ) is anticipating.

Contrary to the 5% decrease anticipate

d by the RBZ, economic analysts are saying this year’s GDP will plunge by 8%.

The African Banking Corporation (ABC) also says GDP will shrink by 8%.

In their forecast for the year, the ABC says Zimbabwe’s real GDP would decrease by 8%, making the country the odd one out compared to other countries such as Botswana, Zambia, Mozambique and Tanzania.

According to the financial institution’s forecast, Mozambique and Tanzania’s real GDP will grow by 7% and 6,5% respectively.

Prominent economist John Robertson said GDP would decrease by 8%.

“The RBZ says the decrease will only be 5% because they think there is a recovery in the economy but I see no evidence of that,” he said.

He said the claims by the monetary authorities that there had been an increase in capacity utilisation are false.

RBZ governor Gideon Gono said capacity utilisation in the manufacturing sector, which had significantly declined in 2003, was now showing strong signs of recovery.

Trust Bank Holdings chief economist David Mupamhadzi said according to their calculations they expect GDP to decrease by 7,5%.

“This will be a positive step since GDP decreased by more than 10% last year,” he said.

However, Mupamhadzi said the previous year’s GDP had been difficult to compute due to the informal sector.

“A key issue is that GDP has become difficult to calculate because for the past two years the economy has become largely driven by the informal sector whose production figures are difficult to compute,” he said.

In his monetary policy, Gono announced that they are expecting this year’s GDP to shrink by a further 5%.

He said this would largely reflect lagged effects of structural rigidities experienced over the 12 months to December last year.

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