Zim economy to grow 7,4 percent next year
resumption.
The minister expects public investments to contribute 5,1 percent to the Gross Domestic Product (GDP) growth next year with the Government pushing completion of projects that stalled this year. From the production side, he said all sectors of the economy were expected to register positive growth, with the agriculture and mining sectors expected to record the highest growth rates of about 11 percent each, tourism (6.8 percent) and energy (10 percent) among the major sectors.
The minister said a good farming season should result in reduced demand for foreign currency, further supporting exchange rate stability. As such, the 2021 National Budget would be a bridge of the TSP and the NDS, which should consolidate gains achieved.
Accordingly, Prof Ncube said inflation is projected to slow down significantly, with average annual inflation projected at 134 percent during the year 2020.
The slowdown in inflation will be attributed to deepening of the foreign currency auction market, which is expected to sustain exchange rate stability. The minister said the Reserve Bank of Zimbabwe would continue to curtail growth in money supply, which is one of the major drivers of inflation.
“Improvement in economic activity will also have positive impact on public finances with revenues expected to increase to about 13.4 percent of GDP.
“With expenditures projected at 14.7 percent, a budget deficit of around 1.23 percent is anticipated, consistent with NDS 1 targets and Sadc recommended thresholds,” said Prof Ncube.
“The current account balance is also projected at below 3.1 percent of GDP, reflecting improvements in exports and management on non-essential imports.”
Under TSP (2018-2020), the Government scored milestones in macro-stabilisation, which positions the economy to focus more on growth initiatives. Commendable strides were also on fiscal consolidation, resuscitation of the monetary policy, investment mobilisation and stimulus measures to productive sectors as well as progress on structural and governance reforms. Endeavours were also undertaken in pursuing re-engagement with the international community, facilitation of investment, and infrastructure development, which all constitute necessary and adequate conditions to launch and support sustainable growth through the NDS 1.
Zimbabwe is, however, not blind to potential risks to the economic and fiscal outlook and is putting in place mitigatory measures, said the minister.
The risks include the continued impact of Covid-19, which has crippled global value chains with no clear end in sight.
Should the global economy contract further, this may pose serious implications on the domestic economy through low international commodity prices, low investment, exports and remittances, as well as tourism opportunities.