Zim economic growth  seen at 5,3pc in 2023 Zimbabwe had another strong performance in agriculture this year, with key crops such as tobacco surpassing output targets (File Picture)

Business Reporter

ZIMBABWE’S economy is projected to grow by 5,3 percent this year, better than initial estimates, on the back of improved farm yields, better electricity supply, and strong mineral prices, according to the Ministry of Finance and Economic Development.

The revised economic growth is ahead of estimates by the International Monetary Fund (IMF), the World Bank, and the African Development Bank (AfDB), which have projected the economy would expand by 2,5, percent 3,6 percent and 2,8 percent, respectively.

Zimbabwe had a strong performance in agriculture, with key crops surpassing output targets due to a better season. For instance, tobacco production has reached 290 million kilogrammes, significantly higher than the 230 million kg initially projected.

Similarly, wheat and maize output is also expected to breach record levels while cotton production is expected to increase by 100 percent to 100 000 tonnes this year.

On the other hand, the coming online of units 7&8 at the Hwange Power Station, with a combined output of 600 megawatts, will help improve the availability of electricity.

“The domestic economy is expected to exceed the initial projected growth of 3,8 percent in 2023, to 5,3 percent, on account of better than anticipated agriculture season, following the normal to above normal rainfall, the muted risk of lower electricity supply due to the successful synchronization of Hwange Power Station Units 7 & 8 and favorable mineral prices,” said the Zimbabwe Public Debt Management Office, a department in the Ministry of Finance and Economic Development, in its annual bulletin.

Zimbabwe’s real gross domestic product growth moderated to 3 percent in 2022, down from 8,5 percent in 2021, due largely to exogenous and endogenous shocks. Floods and drought adversely affected agricultural output, which contracted 14 percent in 2022.

Total output was further constrained by macroeconomic instability in 2022, arising from exchange rate depreciation and hyperinflation. 

The Zimbabwe dollar depreciated 521 percent against the US dollar in 2022, falling from $108 per US dollar in January 2022 to $671 in December 2022. This triggered an increase in annual inflation rate from 60,6 percent in January 2022 to 285 percent in June 2022.

The war between Russia and Ukraine exerted further pressure on the economy by triggering increased fuel and food prices. Zimbabwe’s projected 2023 growth would be above Africa’s average growth, which the AfDB estimated to be at 4,1 percent.

Meanwhile, Zimbabwe has drawn down US$857 million worth of Special Drawing Rights (SDR) from the International Monetary Fund (IMF), the ZPDMA said in the same bulletin.

The money was part of the US$650 billion the IMF distributed to its members to provide additional liquidity for the global economy, supplementing member countries’ foreign exchange reserves and reducing their reliance on more expensive debt.

SDRs are reserve assets issued by the IMF, backed by dollars, euros, yen, sterling, and yuan.

In total, Zimbabwe received the equivalent of US$961 million. “Zimbabwe has in 2021, 2022 and 2023, Government under the Special Drawing Rights (SDRs) utilisation plan, made six drawdowns, amounting to US$857 million,” ZPDMO said.

The first drawdown was made on September 21, 2021, while the last was in February this year.

The funds were used to support social sectors, infrastructure, agriculture, industry, and gold production.

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