ECONOMY TO GROW 3,1PC:
ZIMBABWE’s economy is projected to grow by 3,1 percent in 2019, which is lower than the 2018 anticipated growth of 4 percent, on subdued agriculture performance due to unfavourable weather conditions.
Presenting the 2019 National Budget ($8.1b) yesterday, Finance and Economic Development Minister Professor Mthuli Ncube also attributed the decline to macro-fiscal vulnerabilities from unsustainable fiscal and current account deficits.
Zimbabwe rebased its economy to $24,6 billion from $21 billion after taking into account the informal sector with most Zimbabweans now surviving from informal economic activities.
The mining sector, for instance, whose growth had been reviewed to 25,8 percent was revised to 13 percent in 2018 and further decline to 7,5 percent in 2019.
In agriculture, growth projections of 12,4 percent were set and the sector will grow by 3 percent in 2019. The manufacturing sector’s growth was reviewed lower to 1,7 percent in 2018 from earlier projections of 2,8 percent as the sector succumbed to the economic shocks experienced in the last half of the year. For 2019, the manufacturing sector’s growth is expected to improve to 2,5 percent.
The challenges affecting the economy range from foreign currency shortages, an unsustainable budget deficit, infrastructure deficiencies, unsustainable debt as well as inflationary pressures.
However, a 7 percent economic growth is anticipated from 2020 moving forward on the back of austerity measures that should be implemented early next year.
“Beginning 2019, fiscal consolidation measures are, however, expected to give a strong rebound in growth to above 7 percent from 2020,” he said.
Initially, the economy had been projected to grow by 6,3 percent in 2018 spurred by anticipated good performance in key sectors helping drive the country to an upper middle income economy by 2030.
There was, however, a slowdown in economic growth in the last half of the year on foreign currency supply and allocation challenges, exchange rate misalignments and inflationary pressures that affected mining, manufacturing and services.
As a result, Government reviewed downwards the growth projections to 4 percent for 2018.
“Notwithstanding, the economy currently remains resilient, with performance exceeding expectations.
“Government policy initiatives will see solid growth of 4 percent in 2018, that way sustaining revenue and exports performance above targets,” said Minister Ncube.
The economy has been on a steady growth since 2016 where growth was at 1,7 percent to 2018’s projected growth of 4 percent.
Globally, growth is projected at 3,9 percent for both 2018 and 2019 driven by both industrialised and emerging economies.
The partial recovery in commodity prices should allow conditions in commodity exporters to gradually improve.
Regionally, the Sub-Saharan Africa is projected to increase to 3,4 percent in 2018 and further increase to 3,8 percent in 2019 on stronger global growth, higher commodity prices, and improved market access.
Major challenges in most economies remain external imbalances and fiscal mismatches with about 40 percent of low-income countries in the region now saddled with unsustainable debts.