Zim growth to slow down

HARARE - Economic growth in Zimbabwe is expected to slow down to four percent by 2017, the International Monetary Fund (IMF) said on Tuesday.

In its recent World Economic Outlook report, the IMF said Zimbabwe’s economy is expected to register a five percent gross domestic product (GDP) growth this year and six percent next year before slowing down to four percent in 2017.

IMF’s projection for 2012 differs from the government’s growth forecast of 5,6 percent.

The Fund said the euro crisis and a possible slowdown in China’s performance in the short-term would likely affect economies in sub-Saharan Africa, including Zimbabwe.

“South Africa, strongly linked to Europe, would be particularly affected with possible repercussions for some economies in southern Africa, and softer commodity prices would adversely affect the region’s natural resource exporters,” the IMF said.

The IMF said the priority in much of the sub-Saharan region was to continue to strengthen policy buffers and prepare contingency plans if downside risks materialised.

Zimbabwe’s economy has been on the mend since 2009 after almost a decade of meltdown with major inflation being the major characteristic of the era.

Economic rebound has been driven by the adoption of multiple foreign currencies in 2009.

Major sectors of the economy such as agriculture and mining have enjoyed phenomenal growth which has spurred recovery efforts.

However, a liquidity crunch, absence of foreign direct investments and the government’s failure to obtain external financial support are hampering recovery efforts.

The IMF cut its 2012 forecast for Africa along with most other countries around the world as the eurozone crisis dampens global demand and higher food prices weigh on food importing countries in the region.

It shaved its 2012 projections for Africa to five percent from 5,4 percent.

However, it revised up its 2013 outlook to 5,7 percent from 5,3 percent.

The Fund said spillovers from the eurozone crisis into Africa have so far been modest except for South Africa, which has close financial and trading ties with Europe.

The IMF cut its 2013 forecast for South African growth to three percent from a July projection of 3,3 percent mainly due to the impact from the continuing eurozone debt crisis.
 
It maintained its 2012 projection of 2,6 percent.

“If the euro area crisis escalates further and global growth slows further, sub-Saharan Africa’s prospects will be less favorable,” the IMF said.

“South Africa, strongly linked to Europe, would be particularly affected, with possible repercussions for some economies in southern Africa,” the Fund said, “Softer commodity prices would adversely affect the region’s natural resource exporters,” it added. - Business Writer

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