Conrad Mwanawashe Business Reporter
ZIMBABWE will achieve the 2,7 percent GDP growth target for this year as Government is developing a comprehensive implementation matrix for major economic policies expected to transform the economy.
Finance and Economic Development Minister Patrick Chinamasa told delegates at the launch of the World Bank’s first Zimbabwe Economic Update on Wednesday that if Government’s efforts currently underway to make the productive sectors rebound come to fruition the country could achieve the set growth target.
The World Bank is forecasting a 1,5 percent GDP growth this year citing a number of challenges which may slow down upward movement.
Some of the WB’s reasons for the forecast of the slow growth which include that Zimbabwe is smarting from a severe drought in 2015, the global economy is slowing, commodity prices remain depressed, terms of trade with the country’s main trading partners are deteriorating and the impact of the El Nino on agriculture, water and power sectors may have an adverse effect.
“These headwinds and the brunt of the economic corrections, both domestic and global, will likely be felt by poor households.
“In Zimbabwe, without substantial improvements in the allocation and efficiency of public spending, the recovery could well be regressive – increasing inequality rather than further dampening it,” the World Bank said.
Minister Chinamasa is, however, “very happy with the direction that the country is taking and that the major policies that are needed to move the economy forward are now in place”.
“We are determined and in fact I have been meeting with colleagues on what we should do to make sure that we achieve our target of 2,7 percent by end of this year. Given what we are doing if we reach fruition I believe that we can achieve the target that we set out which is 2,7 percent,” said Minister Chinamasa.
In its forecast, the WB said the services sector will underpin the 1,5 percent growth this year but Minister Chinamasa believes that growth will not solely come from one sector but from the rebound of other sectors of the economy.
“I believe that mining, agriculture and manufacturing should play their roles. So when I look at your update report I think the more correct position is the range 2-3 percent growth. I do not think we can grow by only 1,5 percent,” he said.
The Bretton Woods Institution’s report says that to raise growth from its current medium term of 2-3 percent, Zimbabwe will need to correct key macro-economic balances.
Recent growth has been largely driven by consumption and both public and private investments have fallen since 2011.
Capital flows, including external borrowing and asset sales, are sustaining consumption growth by financing an unsustainably high current account deficit.
WB senior economist said Zimbabwe should step up the pace of investment climate reform and the re-engagement policy. While agreeing with the Bank, Minister Chinamasa said the pace of implementation depends on a number of factors but Government is working flat out to ensure it stays on course.
“We agree on about 99 percent on what should be done but we may disagree on the implementation time-frame. With respect to implementation time-frames the responsibility is ours because we know our circumstances, what is implementable and when.
“We also know the challenges we may face. In some areas it may seem like nothing is happening so I would not want to be rushed when I am walking through a minefield.
“I want to be sure that I measure my step and tiptoe so that I reach my goal. But it is clear that I am not what where I was this time last year,” he said.
“Where we now stand there is now consensus both within Government and outside on the policies that we need. I find no new challenges with respect to consensus on policies. We are all agreed that what we need now is implementation,” said Minister Chinamasa.