Zim economy remains depressed: AfDB

HARARE - Zimbabwe's economic growth is likely to remain depressed with its real Gross Domestic Product (GDP) projected to be less than $7 billion, the African Development Bank (AfDB) has said.

The regional financial institution noted that although Zimbabwe continues to record positive growth rates of above five percent, “but due to the economic crisis with declining production levels until 2009, by the end of 2014, real GDP will still be more than a quarter lower than in 2001.”

According to statistics from the World Bank, Zimbabwe’s GDP was valued at $28 billion in 2001 despite registering a ? 6,5 percent growth rate. The country recorded its worst economic growth of ?17,70 percent in December of 2008.

In its 2013 Africa Economic Outlook released last week, AfDB said Zimbabwe will record 5,7 percent growth next year.

Last month, outgoing Finance minister Tendai Biti revised Zimbabwe’s growth downwards to 3,4  percent from the initial five percent citing depressed activity in the economy.

Biti said developments in the first half of the year “indicate evidence of stagnation, particularly through underperformance in the key sectors of agriculture and mining.”

The southern African country has since 2009 been recording positive growth rates averaging 7,4 percent as a result of political and economic stability ushered in by the just ended inclusive government and introduction of the multiple currency system.

However, the hotly contested harmonised elections ? in which president Robert Mugabe controversially won by 61 percent over his rival Morgan Tsvangirai ? have threatened to derail the country’s future economic prospects.

Last year, the Treasury chief revised downwards the economic growth targets twice from an initial projection of 9,6 percent to 5,6 percent and then to 4,3 percent due to lack of donor funding.

Most industries badly require loans to re-build, but all foreign lines of credit remain closed.

As a result, economic activity remains stifled.

In addition to the credit drought, foreign investors have also been rattled by the country’s empowerment drive, and largely chosen to sit on the fence for now.

Zimbabwe has failed to mobilise $10 billion in donor support to revive the economy, which is starting to take shape after 10 years of contraction.

Donors are insisting on further reforms, including clarity on the government’s new empowerment drive under which the authorities want to seize majority shareholding in all foreign-owned businesses operating in the country.

The AfDB report also ranked Zimbabwe among countries with low human development in Africa such as Mauritania, Sierra Leone and Comoros among others.

“Income inequality is widening and education and health indicators are deteriorating in some parts of the continent.

“As a result and, in addition to resurging cycles of conflict and a restricted access to finance and other services, many people remain trapped in poverty, depriving them the benefits implied by higher economic growth,” said AfDB.

AfDB noted that African countries were faced with a “development challenge” ? one of transforming renewable and non-renewable natural capital into national wealth ? infrastructure, shared income and human capital.

 

Comments (1)

Indigenise, empower, develop and create employment. I am certain this will ensure an upward revision of GDP to 45-50% by 2018!

lola - 15 August 2013

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