World Bank projects 3.8% GDP growth rate for Zimbabwe in 2017
HARARE – The World Bank has projected a 3.8% economic growth rate for Zimbabwe in 2017, a figure 1.8 percentage points lower than June projections but more optimistic than the 1.7% the country’s own Government is targeting.
According to the World Bank’s Global Economic Prospects report titled “Weak Investment in Uncertain Times,” Zimbabwe’s GDP is estimated to have grown 0.4% in 2016 but will grow 3.8% this year and taper off slightly to 3.4% in 2018. The same 3.4% growth rate is expected in 2019.
In Sub-Saharan Africa GDP is forecast to grow by 2.9 percent in 2017, barely above population growth, and by 3.6 percent in 2018. The recovery is moderate because the region continues to adjust to lower commodity prices. Although rising through the medium term, commodity prices will remain well below their post-global-crisis averages.
“Growth rates will continue to vary widely across the region, with growth in South Africa and oil exporters weaker than in metals exporters, and growth in non-intensive resource countries remaining robust.”
In Zimbabwe’s case 2016 was characterised by tight liquidity, high trade and current account deficits, low FDI, depressed production, low commodity prices, high cost of capital and the effects of an El-Nino induced drought. However commodity prices are expected to recover globally while at a country level, results of efforts to boost production of certain key minerals such as coal, gold and diamonds are expected to be felt this year. Government is currently implementing a turnaround strategy for Hwange while reports indicate that the Mines Minister will move ahead with the consolidation of the diamond sector. At the same time, the efforts being made by the Reserve Bank of Zimbabwe to increase production of small scale gold miners is expected to boost mineral revenue. The agricultural sector is expected to rebound following the good rainy season while the manufacturing sector will continue to register improvement on the back of various protection measures.
The report says that in the SSA region, stable currencies, lower inflation, and improved agricultural production should support robust consumer spending in agricultural exporters and commodity importers. Investment growth is expected to remain subdued. “The move toward looser monetary policy in some advanced economies and improvements in commodity prices have helped bolster the trade-weighted exchange value of the South African rand. This has tempered import price pressures in South Africa, and led the Reserve Bank to hold interest rates steady.”
Investments in electricity generation capacity have reduced power outages in the regions. However,
policy uncertainty and low business confidence continue to weigh on activity. In Nigeria, the gradual stabilization of oil prices and an increase in oil production will help support a modest recovery. Policy reforms are helping to improve the environment for private investment.
According to the World Bank report, private consumption growth in South Africa and oil exporters is expected to improve only gradually. In South Africa, inflationary pressures and high unemployment will weigh on consumer spending. In Nigeria, ongoing exchange rate adjustment, coupled with the gradual improvement in oil prices, will provide a modest boost to domestic revenues. This, in turn, should help the federal and state governments meet some of their financial obligations, including the clearance of salary arrears. Meanwhile,
In Angola, high inflation and tight policy will continue to weigh on domestic demand. In other mineral exporters, the outlook is broadly favorable. In Ghana, improving fiscal and external positions should help boost investor confidence. Post-Ebola recovery is expected to continue in Guinea, Liberia, and Sierra Leone, as rising commodity prices boost investment and exports. In Mozambique, recent progress in developing the nascent energy sector will help boost investment in gas production.
In agricultural exporters (Côte d’Ivoire, Ethiopia, Kenya, Rwanda, Senegal, and Tanzania), large
infrastructure development programs will continue to support robust growth. To finance these programs, their governments continue to draw on public-private partnerships (Côte d’Ivoire, Rwanda), donor aid (Rwanda), and Chinese entities (Ethiopia, Tanzania). However, political fragility will exert a drag on growth in countries such as Burundi and The Gambia.
Among commodity importers, Cabo Verde, Mauritius, and the Seychelles are expected to expand at a moderate pace, as heightened uncertainty in Europe, their main export market, weighs on tourism, investment, and trade flows. Regional trade and infrastructure investment will help support a gradual increase in growth in Lesotho and Swaziland. Electricity shortages and weak investment will continue to affect growth in the Comoros.
The outlook assumes that fiscal positions will gradually improve, as commodity exporters
continue to adjust. At the broader level, global growth for 2017 has been projected at 2, 7 percent on the back of anticipated gains in emerging and developing economies. “Growth in emerging market and developing economies (EMDEs) is expected to pick up in 2017, reflecting receding obstacles to activity in commodity exporters and continued solid domestic demand in commodity importers.