ZIMBABWE’S economy is expected to register a modest 2,9% growth this year from a negative dip recorded last year, according to the World Bank’s Global Economic Prospects report released this week.
The Bank’s projected growth is much lower than the 7,4% projected by the Zimbabwean government in the 2021 National Budget. It is also lower than the 4% average global growth that was anticipated by the World Bank last year.
In the budget, Finance and Economic Development minister Mthuli Ncube highlighted that, from supply side, this growth will be driven by strong recovery in agriculture which is projected to grow by 11,3%,mining 11%, as well as other sectors such as electricity, construction, transport and communication as well as finance and insurance.
According to the World Bank, Zimbabwe’s real GDP growth declined by 10% last year, against Treasury projections of 4,1%.
Citing examples of Zimbabwe, Mozambique and Gambia, the Bank also said that ballooning government debt burdens across low income countries are envisaged to severely constrain fiscal policy.
While the National Budget highlighted that its projected growth trajectory assumes reduced severity of Covid-19 pandemic as vaccine coverage and therapies improve, the World Bank report also assumed that its projected 4% global growth is conditional upon an initial Covid-19 vaccine rollout becoming widespread throughout the year.
“Although the global economy is growing again after a 4,3% contraction in 2020, the pandemic has caused a heavy toll of deaths and illness, plunged millions into poverty, and may depress economic activity and incomes for a prolonged period,” says the Bank, adding that authorities also need to facilitate a re-investment cycle aimed at sustainable growth that is less dependent on government debt, to support economic recovery.
Meanwhile the growth in Sub-Saharan Africa is expected to rebound only moderately to 2,7% in 2021 — 0,4 percentage points weaker than previously projected — before firming to 3,3% in 2022. While the rebound in private consumption and investment is forecast to be slower than previously envisioned, export growth is expected to accelerate in line with the rebound in economic activity among major trading partners. Despite the envisioned recovery, the level of regional GDP in 2022 is forecast to remain below the level projected in January 2020.
“The sluggish recovery reflects persistent outbreaks in several economies that have inhibited the resumption of economic activity, particularly in services sectors such as tourism.” the report states.