‘2016 Budget clashes with ZimAsset’

via ‘2016 Budget clashes with ZimAsset’ – DailyNews Live Ndakaziva Majaka • 9 December 2015

HARARE – Zimbabwe’s 2,7 percent economic growth projection for next year  is out of sync with the country’s five-year economic blueprint goals, Speaker of Parliament Jacob Mudenda has said.

Mudenda told delegates attending a Post-Budget Seminar in the capital yesterday that there was need to find ways of growing the economy in line with the 7,3 percent growth per annum highlighted in ZimAsset.

“This (low growth) speaks volumes about us as lawmakers and this avenue needs to be interrogated,” he said.

In his 2016 National Budget presented last month, Finance minister Patrick Chinamasa said he expected overall gross domestic product (GDP) to grow by 2,7 percent in 2016 — up from 1,5 percent this year — driven by agricultural recovery and growth in the mining sector.

However, market watchers said government’s projection was not only unrealistic but also “nothing short of heroic” given the volatility in the agriculture and mining sectors.

“I feel the minister must actually revisit his GDP forecast on global price fluctuation in the mining sector. All his assumptions around the Budget are tenuous and in my opinion it is very heroic to assume Zimbabwe will grow by 2,7 percent next year,” said economist Godfrey Kanyenze.

He added that agriculture was not likely to realise the 1,6 percent growth forecasted by Chinamasa  in his Budget on the back of the El Nino effect and late rains.

Zimbabwe, which had an initial growth projection of 3,2 percent for 2015, saw this forecast being slashed, with the International Monetary Fund (IMF) cutting Zimbabwe’s economic growth forecast to 1,5 percent from the initial projection of 2,8 percent due to drought and declining international metal prices.

For the past few years, Zimbabwe has been struggling to recover from a catastrophic recession that was marked by a billion percent hyperinflation and widespread food shortages, and some analysts say the country could tip back into a downturn this year.

This comes as the Confederation of Zimbabwe Industries (CZI), in its Manufacturing Sector Survey 2015 said that most Zimbabwean companies believed the country was going to sink into a recession in 2016.

Presently, the local equities market, Zimbabwe Stock Exchange (ZSE) — a leading barometer of the state of the economy — has been on a relentless bearish run for nine consecutive months to November, reflecting the current economic recession.

Earlier in the year, the World Bank — in its Global Economic Prospects June 2015 sub-Saharan Africa — had predicted Zimbabwe’s economy to grow by one percent this year on the back of a sustained liquidity crunch and underperformance in all economic sectors.