Zimbabwe: World Bank Forecasts Grim Outlook
THE World Bank has said the 2014 outlook for Zimbabwe’s still ailing economy remains increasingly uncertain due to a host of internal and external factors.
In its September Economic Briefing, the bank said growth in Zimbabwe was rapidly fading, and after 4, 4% recorded in 2012, the growth projections for 2013 have been revised downwards to 3%, with little prospects for a recovery in 2014.
“The economy faces uncertainty both from expected volatility in the global economy, and on the domestic front after July elections, amidst worsening macroeconomic indicators and increased vulnerability of the banking sector,” the bank said.
As Zimbabwe’s external position has been supported by substantial short-term capital inflows, the situation would be compounded by the risk of capital outflows from emerging markets, as the United States Federal Reserve progressively unwinds its expansionary monetary policy.
“Growth performance has been stymied by continued slowdown of the key sectors of the economy, amidst easing of international commodity prices, low investment, tight credit conditions, and policy uncertainty after the July elections,” the bank said.
The briefing also noted that concerns over the new government economic policies, including extensive implementation of indigenisation legislation, were bound to extend the wait-and-see attitude of both domestic and foreign investors that characterised the run-up to elections.
The expected increased volatility of commodity prices would affect Zimbabwe’s export growth, worsening the current account deficit, shrinking fiscal revenues and upsetting the economic recovery process.
Agriculture’s growth prospects have been revised downwards and the sector is expected to slightly contract by -0,3% while the decline in international prices is dampening growth of the mining sector.
Zimbabwe’s manufacturing sector growth is projected at 1,5%, stunted by low investment, declining competitiveness amidst tight credit conditions and the services sector will remain the biggest contributor to Gross Domestic Product, at 41%.
The bank said that as fiscal revenues stabilise around US$4 billion, Treasury can no longer keep the pace of the past fiscal recovery to absorb new commitments.
Zimbabwe’s external position remained under pressure in 2013.
National statistical agency Zimstat’s data showed that exports reduced to US$1,55 billion in the first six months of 2013 compared with US$1,56 billion in 2012 with mineral exports and tobacco contributing towards the bulk of exports.