The World Bank has lauded the growth of service-based industries and a knowledge-based economy within the Zimbabwean economy. In its latest Zimbabwe Economic Update: Changing Growth Patterns, the World Bank highlights shifting trends in local industrial economics as traditional linchpin sectors such as mining, agriculture and manufacturing have been negatively affected by varying internal and exogenous factors.
“Agricultural production now represents a broadly constant share of total output, while the service sector is experiencing dynamic growth.
“However, the manufacturing and mining sectors are struggling to cope with rising capital costs, a difficult business climate and a decline in external competitiveness.
“As a result, there has been a shift in economic activity from industry to services,” said the World Bank.
“The service sector, currently 60 percent of gross domestic product, grew at an average rate of 8,5 percent per year during 2010-14, 4,3 percent in 2015 and is projected to grow by over 3 percent in 2016.
“Construction, finance, insurance, hotels and distribution recorded strong growth in 2015.
“Telecommunications is also expected to continue to make important contributions to overall growth as its customer base continues to expand.
“In 2015, the mobile phone penetration rate (active) rose to 93 percent, and internet access reached 47 percent of the population.
“While the telecommunications industry remains pivotal to the service sector’s development, signs of weakening domestic demand are likely to dampen its growth prospects in the short-term. Knowledge-intensive sub-sectors that employ skilled workers and serve upper-income consumers led the sector’s growth.”
“Non-tradable services such as, education and public administration also experienced rapid growth, partly in response to increasing fiscal expenditures and rising public sector wages, including teachers’ salaries.
“The rise of knowledge-intensive sub-sectors such as finance, transport and communications underscores the growth potential of Zimbabwe’s service sector.”
The international financial institution expects Zimbabwe’s GDP growth to remain at 1,5 percent.
“Zimbabwe has enormous potential for inclusive growth, but it will be a complex challenge to ensure that recovery is truly broad-based and not regressive,” said the World Bank. — BH24.