Global rating firm projects higher GDP growth for Zim

Tapiwanashe Mangwiro Senior Business Reporter

Renowned International rating firm, Fitch Solutions, projects Zimbabwe’s gross domestic product (GDP) to bulk by 2,4 percent in 2023, which is 0,4 percent higher than their 2022 projection of 2,0 percent. 

‘‘The acceleration in growth in 2023 will be driven by a more expansionary fiscal policy in the run-up to elections in the middle of the year and an easing of price pressures, which should provide further support to consumers,” said the top American market research firm. 

It comes after the African Development Bank (AfDB) projected the country’s economy to also grow by 2,8 percent in 2023 and by 2,9 percent in 2024. 

Despite the adverse impacts caused by Covid-19 and other global shocks like supply chain disruptions caused by the conflict in Ukraine, Zimbabwe remained resilient, recording growth in 2022. 

In 2023, Zimbabwe is projected to record economic growth supported by increased agriculture production with normal to above normal rainfall that is likely to see the country recording impressive crops yields. 

However, the World Bank (WB) has maintained that Zimbabwe’s economy will grow by 3,6 percent this year against the Government’s 3,8 percent. 

According to the WB global economic prospects report for January 2023, Zimbabwe’s growth prospects are in line with the Sub-Saharan Africa region growth which is also at 3,6 percent in 2023. 

Government’s forecast of 3,8 percent in 2023 will be sustained mainly by mining, construction and agriculture and tourism. The country’s tourism is also on a recovery path after years of battering by Covid-19.

The forecasts will be sustained by gains that have been achieved on economic stability largely as a result of Government measures on inflation and exchange rate. 

Economist, Dr Prosper Chitambara, said the projections on their own are positive and they acknowledge that there are a number of things that the Government has done right to maintain the economy on a growth trajectory. 

He said these include the improvement of public spending on infrastructure, which is a positive development for the economy as perfect roads result in free floor of goods and services to oil industrial operation at minimum costs.

“There has been significant progress towards liberalisation of the markets of the economy but there is room for further liberalisation. This position was recently highlighted by the International Monetary Fund (IMF),” he said. 

Dr Chitambara said forecast normal rainfall patterns will result in a good agriculture season which will help the sector to improve its contribution to the economy. Agriculture contribution to GDP is around 8 percent.  

“Normal rains will also improve water bodies for hydro electricity generation as power has been a setback especially in recent times,” he said.

Already due to good rains being received, some dams of are already spilling, improving prospects of some of them to contribute towards electricity.  

He indicated that the mining sector is poised to do well riding on commodity prices which continue firming. 

He added that agriculture will be better than last year and the rebound will positively impact other sectors of the economy such as manufacturing. 

Despite maintaining the growth projections, the WB notes that geopolitical tensions, global economic shocks, rising food, oil and commodity prices have led to a slash in growth targets for most economies, including Zimbabwe. 

In December 2022, Fitch also forecasted the country will have a current account surplus in 2023. 

It is anticipated that Zimbabwe’s current account surplus will narrow from 3,0 percent of GDP in 2022 to 2,2 percent of GDP in 2023.

According to the rating firm, this will be driven by a combination of strong import demand in the run-up to elections in mid-2023 and weak global prices for Zimbabwe’s key commodity exports.

You Might Also Like