Zimbabwe’s economy will grow by 1.5 percent in 2016 and consumer prices will remain deflationary due to global and local constraints on its recovery, the World Bank said on Wednesday.
The global lender said growth in the southern African nation this year would be slower than the government’s estimate of 2.7 percent, while inflation would average -1.7 percent.
“We expect deflation to continue this year,” World Bank senior economist for Zimbabwe Johannes Herderschee said during a presentation of the bank’s outlook on Zimbabwe.
Zimbabwe is experiencing crippling power cuts, blamed for keeping potential investors away from an economy still struggling to overcome the impact of a steep 1999-2008 recession that saw it contract by nearly half.
“The fundamentals for recovery are still strong but the headwinds are increasing. These headwinds and the brunt of economic corrections, both domestic and global, will likely be most deeply felt by the poor,” the World Bank said in a report.
However, Finance Minister Patrick Chinamasa said he believed the government’s growth target of 2.7 percent this year was still achievable, adding that Zimbabwe’s economy remained resilient despite predictions of recession.
A drought blighting southern Africa has hit Zimbabwe particularly hard. The former British colony finances its entire budget from taxes after international financial institutions stopped lending in 2000 after Zimbabwe defaulted on its debt.
Chinamasa has previously said Zimbabwe will clear arrears of $1.86 billion owed to the World Bank, the International Monetary Fund and the African Development Bank in the first half of this year in a bid to access new financing.
Chinamasa said that process was underway, adding that a World Bank team was in the country to discuss progress as well as brainstorm on a possible new country financing programme.
“We are working now frantically to produce a country strategy paper which sets out what we need and what amounts we need to recover our economy,” Chinamasa said.