Zimbabwe is poised for unstoppable economic growth after Finance and Economic Development Minister Professor Mthuli Ncube on Thursday reviewed upwards the country’s economic growth target from 7,4 percent to 7,8 percent on account of multiple gains recorded this year.
Prof Ncube further projected that the progress will be sustained as next year’s economic growth rate will be at 5,4 percent, consistent with President Mnangagwa’s vision of an upper middle-income economy by 2030.
This year, Zimbabwe is expected to outperform its peers in the Sub-Saharan region, whose economic growth rate has been projected at 3,4 percent up from the initial 3,1 percent.
Despite the debilitating effects of Covid-19, progress has been unrelenting in a number of sectors, with agriculture poised to achieve a record 34 percent growth this year.
The country is set to achieve a record harvest of 2,7 million tonnes of maize following a good rainy season and Government programmes such as Command Agriculture, Pfumvudza/Intwasa as well as the Presidential Inputs Support Scheme.
This will see the country eliminating costly food imports that gobbled around US$200 million last year.
The country has seen an increase in diaspora remittances with US$746, 9 million received from January 1 to June 30 this year, a jump of over US$500 million in comparison to US$288,7 million received during the same period last year.
Remittances are projected to continue to drive the current account surplus in 2021, with an end of year projection of US$1,3 billion.
Presenting the Mid-term Budget Review to Parliament on Thursday last week, Prof Ncube said economic recovery is on course.
“Despite the raging global pandemic, implementation of the NDS1 through the 2021 National Budget remains on course, following a favourable farming season, recovery in manufacturing sector and firming international commodity prices. The Covid-19 response measures, coupled with the vaccination exercise currently underway globally and domestically, continue to give hope in sustaining the economic recovery.
“Now that the macro-economic environment is stable, the Government will continue to safeguard these gains to ensure improvement in the socio-economic well-being of citizens. Therefore, let’s focus on building resilience and recovery of the economy in the middle of this Covid-19 storm.”
Last year, inflation was a thorn in the flesh for the economy, but authorities have implemented measures that have considerably reduced the rate in the increase of price of goods and services from 837 percent in July last year to 106 percent by June this year.
Prof Ncube said the Government will continue to pursue policies that contain inflation.
“Fiscal and monetary consolidation measures being implemented by the Government to date, have managed to firmly anchor inflation expectations as shown by a significant decline in inflation from 837,5 percent in July 2020 to 106, 6 percent in June 2021. The July year-on-year inflation is 56,37 percent and 2,56 percent for month-on-month inflation,” he said.
“Annual inflation is expected to decline further by end of August 2021 and down to between 22 percent and 35 percent by December 2021.”
There is a positive outlook for the mining sector, as prices of metals are projected to rise by almost 30 percent in 2021 with Prof Ncube noting that this will be “driven by growth from stimulus measures and easing of supply constraints”.
Tobacco output is projected to increase by 8 percent to 195 million kilogrammes this year compared to 184 million kilogrammes recorded in the 2019/20 season.
Of significance is that the average price of tobacco is higher by 11 percent at US$2,77 per kg compared to US$2,44/kg paid during the previous season.
Prof Ncube projected the manufacturing sector to grow by 7 percent this year, with gains across sub-sectors like foodstuffs, chemical and petroleum products, drink and tobacco, as well as non-metallic mineral products.
The country has enhanced the implementation of infrastructural projects that have brought tangible benefits to communities countrywide, including improvements in services such as health, education, roads, water and sanitation, largely due to the devolution programme.
In an interview with The Sunday Mail yesterday, economist, Professor Gift Mugano, gave the thumbs-up to Prof Ncube’s growth projections.
He forecasted that more Foreign Direct Investment will flow into the country.
“I strongly agree with the Minister’s views because for the last two years we had an economic recession because of drought and Covid-19. However, because we are building from a lower base, chances are high that our economy is improving because there is good production from the agriculture sector.
“This helps us as a country to save foreign currency as well as raw materials. Also the stability we have had in the country since June last year to date also allows companies to reinvest. In 2019, companies struggled with cashflow due to inflation but now they have confidence to plan ahead. Stability and growth attract investment, so we should see more FDI.”
Another economist, Mr Kingstone Khaniye, said:
“In terms of economic growth we consider three things: achieving macro-economic stability, growth of the economy and managing local production, which is the key point. As we can all see, inflation is now under control and there has been a management on the foreign exchange (RBZ auction system). The budget review was indeed an encouraging report for the growth of our country.”