Zim targets 2,7pc growth rate for 2016

HARARE - Zimbabwe is targeting to grow its economy by 2,7 percent next year driven by agricultural recovery and growth in the mining sector, businessdaily has learnt.

The figure — described by analysts as “very optimistic” — came out in the budget strategy paper prepared by Treasury released over the weekend.

“Accordingly, in 2016, overall gross domestic product is projected at 2,7 percent riding on the recovery of agriculture and mining as well as positive performance of the rest of the sectors,” read part of the document.

The latest projection comes as a surprise to many after Zimbabwe recently slashed its 2015 growth forecast by almost half to 1,5 percent due to low aggregate demand and harsh weather conditions experienced in the early part of the year.

For the past few years, Zimbabwe has been struggling to recover from a catastrophic recession that was marked by billion percent hyperinflation and widespread food shortages, and some analysts say the country could tip back into a downturn this year.

Zimbabwe National Chamber of Commerce (ZNCC) chief executive Christopher Mugaga said Finance minister Patrick Chinamasa must set “very conservative and modest” projections in his budget, to be presented on Thursday.

“The current electricity situation is nothing short of a crisis that is going to affect industry very much, especially manufacturing. Taking this into account Chinamasa’s budget should be smaller than the one he presented last year,” Mugaga said.

The industry body’s chief executive also said next year’s growth projection was not going to be above one percent.

“Projections should be strictly numbered, and growth cannot be anything above one percent as the country’s biggest economic contributor, mining, is power intensive,” he said.

This comes as the Confederation of Zimbabwe Industries (CZI), in its Manufacturing Sector Survey 2015 said that most Zimbabwean companies believed the country was going to sink into a recession in 2016.

Presently, the local equities market, Zimbabwe Stock Exchange (ZSE) — a leading barometer of the state of the economy — has been on a relentless bearish run for seven consecutive months to September, reflecting the current economic recession.

Earlier in the year, the World Bank —  in its Global Economic Prospects June 2015 Sub-Saharan Africa —  had predicted Zimbabwe’s economy to grow by one percent this year on the back of a sustained liquidity crunch and under performance in all economic sectors.

Economic experts say the downward reviews put a dent on the ruling Zanu PF’s five-year economic blueprint, ZimAsset, which was supposed to drive the country forward at an average growth of 7,2 percent per annum.

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