The International Monetary Fund (IMF) has slashed Zimbabwe’s GDP growth by half a percentage point to 3 percent from its earlier estimate of 3.5 percent on increasing cost of living, tight financial conditions and the impact of the COVID-19.
This come after another global financier, the World Bank this week raised concern over the country’s sluggish growth rate of 4.6 percent which needs to be doubled to around 9 percent if Vision 2030 targets are to be met.
In its World Economic Outlook Report for October, IMF estimates that Zimbabwe’s economy will grow by 3 percent this year before it further slips to 2.8 percent in 2023. It is expected to marginally improve to 3 percent in 2027.
External factors will have the biggest effect on the country’s performance after IMF projected global inflation to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024.
“The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook,” said IMF.
“Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic.”
According to Government figures the economy is set to grow by 4.6 percent this year, having slashed its estimates in July following protracted geopolitical crises.
There are suggestions that Government estimates could be over-stated given the low economic activity in the economy as well as the slowdown of various public infrastructure projects beginning of third quarter as authorities sought to manage bulk payments to contractors.
Already local companies are feeling the heat after the RBZ increased interest rates to 200 percent which has limited capacity to borrow for production.