'Zim may miss GDP growth target'

HARARE - Zimbabwe could miss its five percent projected gross domestic product (GDP) growth for 2013 due to the uncertainty created by the elections expected this year.

This comes as the southern African country’s economy continues to show signs of fragility with GDP growth rates decelerating from highs of about 10 percent in 2010 to 4,4 percent last year.

Last year, Finance minister Tendai Biti was forced to revise downwards the country’s GDP growth forecast from 9,6 percent to 4,4 percent due to underperformance of the agriculture sector.

He, however, predicted a five percent growth this year on the back of an anticipated boom in the mining industry.

But during the 2013 first quarter, the economy has showed a number of fundamental weaknesses that may hinder the projected growth.

In its southern Africa quarterly overview and analysis, AfDB noted that Zimbabwe’s economy remains fragile, as its recovery is largely dependent on a few sectors, mainly agriculture and mining, which are vulnerable to external shocks.

“Zimbabwe also continues to face a number of economic problems, including liquidity and financing constrains, limited revenue growth and a wide current account deficit,” it said.

The regional developmental finance institution said Zimbabwe’s depressed exports and a widening trade deficit were a reflection of the local industry’s low production capacity and the absence of diversification and value addition.

“The current scenario — which encompasses overreliance on primary commodities, whose prices are influenced by international developments — leaves little room to influence the pattern of exports.
 
“Linkages of other sectors with the mining and agriculture sectors would go a long way in increasing the value of exports.”

AfDB said following the adoption of the multicurrency system, some exporters have been content with supplying the domestic market.

“Zimbabwe needs to recapture regional markets, create new manufactured products and take advantage of deepening regional integration, which is creating larger markets,” said the bank.

Local companies — which took a heavy knock during the hyperinflationary period a few years back — continue to struggle in a dollarised economy due to a cocktail of challenges that include clogged credit lines, obsolete equipment among others.

According to an industry capacity utilisation survey carried by the Confederation of Zimbabwe Industries (CZI) last year, the country’s manufacturing survey is operating at below 50 percent capacity.

“In this regard, horticultural exports and agro-processing industries need to be revamped, and there should be beneficiation of minerals to increase the value of mineral exports,” said AfDB.

The southern African country will this year hold watershed elections to end the Government of national Unity (GNU) formed in 2008. - John Kachembere

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