AfDB projects 1.3% growth rate for Zimbabwe for 2017
HARARE -Zimbabwe’s gross domestic product (GDP) growth is projected to increase by 1.3% in 2017, supported by improvements in the agriculture, tourism, manufacturing, construction and financial sectors, according to the 2017 African Economic Outlook released by the African Development Bank (AfDB). The projected growth rate is less optimistic when compared to the World Bank’s 3.8% and International Monetary Fund’s 2%.
The report noted that Zimbabwe received above normal rainfall, which is a major boost for the economy. Zimbabwe’ GDP declined to a record low since dollarization last year, but good rains supported by robust agriculture inputs programmes helped to turnaround fortunes in this agricultural season. The report suggests that Zimbabwe needs to stimulate entrepreneurship and industralisation but this will require deep reforms to improve the business environment and promote employment creation.
It says the economy has experienced cash shortages owing to rising informalisation in the economy, with fiscal revenue underperformance, declining capital inflows and export receipts, a high fiscal deficit and public indebtedness; external imbalances and capital flight also contributing.
On bond notes, introduced in November last year by the Central Bank, the report said: “The introduction of bond notes initially created apprehension but they have been broadly accepted as a medium of exchange. Economic activity in the near term will depend to a large extent on how quickly measures instituted by the government will be implemented,” it said.
The report says that Africa’s economic growth expected to rebound to 3.4% in 2017 and 4.3% in 2018 on assumptions that as commodity prices recover, the world economy will be strengthened and domestic macroeconomic reforms are entrenched.In 2016, Africa’s economic growth slowed down to 2.2% from 3.4% in 2015 due to low commodity prices, weak global recovery and adverse weather conditions, which impacted on agriculture production in some regions.
“Although economic headwinds experienced in the last two years appear to have altered the ‘Africa rising’ narrative’, we firmly believe the continent remains resilient, with non-resource dependent economies sustaining higher growth for much longer spell.
“With dynamic private sectors, entrepreneurial spirit and vast resources, Africa has the potential to grow even faster and more inclusively,” Abebe Shimeles, Acting Director, Macroeconomic Policy, Forecasting and Research Department, at the AfDB said.
According to the Outlook, Africa has high untapped potential for entrepreneurship. In 18 African countries for which statistics are available, 11% of the working-age population set up their own firms to tap specific business opportunities, a level which is actually higher than in developing countries in Latin America (8%) and in Asia (5%). However, few of them invest in high-growth sectors, grow to employ more workers or introduce innovations to markets.
The report says adds that, if African economies are to turn their dynamism into an engine of industrialisation, there is need to improve the skills of workers, enhance the efficiency of business clusters – such as industrial parks and special economic zones – and increase access to finance, with more affordable credit and more innovative instruments, for small and young firms.