World Bank projects growth for Zim

Source: World Bank projects growth for Zim | The Herald

World Bank projects growth for Zim
Mukami Kariuki

Mukudzei Chingwere

Herald Reporter

The World Bank has commended the Government’s economic revival framework and noted that Zimbabwe is poised to register economic growth this year despite a raft of challenges posed by the Covid-19 pandemic.

Gross Domestic Product (GDP) growth in Zimbabwe was yesterday projected to grow by 3.9 percent in 2021, in what the World Bank says is a significant improvement after a two-year depression.

Earlier, the African Development Bank projected a 5,6 percent economic growth this year driven by recovery in the agriculture, mining, and tourism sectors, together with increased public and private investments.

The endorsements for growth vindicates the Government, which had earlier projected the transformation of the country’s fortunes.

In his 2021 budget, Finance and Economic Development Minister, Professor Mthuli Ncube, estimated growth of 7,4 percent.

According to the World Bank Zimbabwe Economic Update (ZEU) launched yesterday, the growth will be led by the good harvests on the agricultural front, adaptations to the Covid-19 disruptions as well as the controlled inflation.

“Overcoming economic challenges, natural disasters, and the pandemic, social and economic impacts, provides the World Bank perspective on macroeconomic and poverty developments and discusses ways to strengthen public service delivery in key sectors.”

This is the third economic update for Zimbabwe produced by the World Bank.  Economic Updates are a standard World Bank tool for macroeconomic and fiscal monitoring.

ZEU noted that economic recovery was expected to strengthen further in 2022 with GDP growing at 5.1 percent as the deployment of vaccines intensified and implementation of National Development Strategy 1 (2021-2025) bore fruits. 

Overall, the Covid-19 global contagion continued to pose significant downside risks and thus the global and local outlook remained uncertain.

 A prolonged pandemic, weaker global demand, and heightened macroeconomic instability could choke economic growth, increase poverty, and worsen human capital development outcomes.

Mitigating these risks required domestic policies to strengthen and sustain macroeconomic stability – which was critical for consolidating economic recovery. 

“Recent efforts to stabilize prices through rule-based monetary and exchange rate policies have been effective and must be continued and expanded. Fiscal policies supportive of these efforts have thus focused on avoiding monetary financing and quasi-fiscal activities, reducing distortive subsidies, and improving fiscal and debt transparency.

“Improving the country’s growth prospects will require further attention to policies that strengthen the quality of service delivery in the social sectors,” said Mukami Kariuki, World Bank country manager. 

Facing tight public finances and limited recourse to external financing, Zimbabwe would need to rely mostly on re-allocating domestic resources to optimal public uses and leveraging private financing and humanitarian support where possible. 

Addressing underlying challenges in health, education, social protection, and food security would require sustained financing, strengthened accountability frameworks and investments in appropriate management information systems.

ZEU reviewed developments in 2019 and 2020 and emerging trends in 2021. 

Part one of the ZEU provides an overview of the macroeconomic and poverty context while Part Two assesses the impact of Covid-19 and other exogenous shocks on delivery of basic services to the poor and proposes mitigating actions for discussion. 

It also summarizes key policy options needed to stabilize Zimbabwe’s economy, minimize the social costs of the transition and prepare for an economic recovery.