Zim to miss regional growth targets

THE International Monetary Fund (IMF) sees a marginal increase in the sub-Saharan economic growth rate from 5% this year to 6% in 2014, but analysts doubt this will be reflected in Zimbabwe’s economy.

Kudzai Kuwaza

In its October 2013 report titled Regional Economic Outlook: Sub Saharan Africa Keeping the pace, the IMF said it expected sustained growth despite increasingly volatile global economic conditions.

“Softening and increasingly volatile global economic conditions are expected to have only a moderate downward impact on sub-Saharan Africa this year and next,” the report said. “Growth is projected to remain robust at about 5% in 2013 and 6% in 2014, backed by continuing investment in infrastructure and productive capacity.”

This is in stark contrast to Zimbabwe’s particular situation whose growth projections were revised downwards from 5% to 3,4% this year.

Economist John Robertson told businessdigest the growth predicted by the IMF would not be reflected in the country due to lack of investment and the uncertainty in the market before the holding of the harmonised elections.

He said although there has been investment by international companies such as Anglo Platinum’s Unki Mine, it was inadequate to spur economic growth to the levels forecasted by the IMF.

Robertson added the uncertainty in the economy caused by the indigenisation policy and the bleak prospects of the agricultural season would impede growth.

Robertson said should there be a change in policy, the growth would only be realised in 2015 as it takes time for growth to register.

The IMF said inflation was likely to maintain its downward trend for a third consecutive year towards less than 6% by the end of 2014 “with benign prospects for food prices throughout the region and the continuation of prudent monetary policies.”

However, the report warned further weakening in emerging market economies, including some of the region’s new economic partners or in advanced economies, could affect its prospects for growth.

“Revenue mobilisation remains a priority in most countries to help fund priority social and capital spending, and in some cases also to help strengthen buffers,” the report said.

The Bretton Woods institution recommended that all countries should step up efforts to further improve the domestic business climate by streamlining regulations and reducing red tape and work to improve their economic statistics.

“Looking ahead, policymakers should focus on structural reforms for growth and inclusiveness, and will need to grapple with the risks of a lasting reduction in momentum in commodity prices as the world economy moves toward a new configuration of growth drivers,’’ the report added.