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Political uncertainty to slow economic growth

THE World Bank (WB) has projected Zimbabwe’s fragile economy to marginally grow 0,9% in 2018, as the country gradually navigates through an uncertain political transition cycle that saw the toppling of longtime ruler Robert Mugabe last year.

By Tinashe Kairiza

Mugabe, who was succeeded by Zimbabwe’s new President Emmerson Mnangagwa, led the country for 37 years, during a period which saw the economy deteriorating sharply through government’s ruinous economic policies.

The WB growth estimate, contained in a report titled Global Outlook, Broad Based Upturn, Will it Last?, is in sharp contrast with Harare’s projection that its economy would grow 4,5%, buoyed by a wave of optimism ushered in by Mugabe’s exit.

Finance minister Patrick Chinamasa last year forecast Zimbabwe’s economy to register a firm 4,5% growth margin in 2018, underpinned by strong performances in the agriculture and mining sectors.

But WB said economic growth will not be as rapid as pronounced by government, as Zimbabwe gradually manoeuvres through an uncertain political and security transition cycle.

“Other downside risks include a protracted period of heightened political and policy uncertainty, which could further hurt confidence and deter investment, risk is elevated in South Africa, where the ruling African National Congress’s leadership election could lead to deep divisions within the party, and in Zimbabwe, where a political transition is unfolding.

“Droughts, conflicts, and worsening security conditions would weigh heavily on economic activity in the region, especially in fragile countries,” the Bretton Woods institution said.

Economic growth between 2019 and 2020, WB said, would remain flat and expand by less than 2%.

Sub-Saharan Africa regional growth margin in 2018 was projected at 2,3%, with the region’s strong economies such as Angola, South Africa and Nigeria recording an uptick as commodity prices begin to recover.

“A modest recovery is underway in Sub-Saharan Africa, supported by an improvement in commodity prices.

“Although growth rebounded in Angola, Nigeria, and South Africa — the region’s largest economies — it remained low. Metals exporters in the region experienced a moderate rebound, partly reflecting an uptick in mining output amid rising metals prices,” WB said.

However, WB revised upwards the growth forecast for 2017 from 2,3% to 2,8%, propelled by a gradual recovery in investment and trade. Zimbabwe’s new administration, which has proposed sweeping reforms such as abandoning the contentious indigenisation policy, has said it would now pursue politics that transform the country’s weak economy.

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