World Bank trims Zim 2017 growth projection to 2.3 percent
HARARE – The World Bank has slashed its 2017 growth projection for Zimbabwe by 1.5 percent, from its January projection of 3.8 percent. The size of reduction is the biggest of all least developed countries. The Bank now projects a GDP at market prices of 2.3 percent for Zimbabwe this year, according to the June Global Economic Prospects report released last night.
The report, themed “A Fragile Recovery”, also trimmed Zimbabwe’s medium term growth projections. Next year’s GDP growth, which was projected at 3.4 percent in January, has since been cut down by 1.6 percent to 1.8 percent. Growth for 2019 was also cut down from the 3.4 percent projected in January to 1.7 percent. The Bank however revised upwards its 2016 growth estimate for Zimbabwe from the 0.4 percent projected in January to 0.7 percent, which is slightly above the Ministry of Finance’s revised projection of 0.6 percent.
Zimbabwe’s growth projection for this and next year is now below the Sub-Saharan Africa average, which was the total opposite in the January forecast. “Growth in Sub-Saharan Africa is forecast to pick up to 2.6 percent in 2017 and to 3.2 percent in 2018, predicated on moderately rising commodity prices and reforms to tackle macroeconomic imbalances”, said the Bank.
“Growth in Sub-Saharan Africa is recovering, supported by modestly rising commodity prices, strengthening external demand, and the end of drought in a number of countries. Security threats have subsided in several countries”, the Bank says.
Per capita output in the region is projected to shrink by 0.1 percent in 2017 and to increase to a modest 0.7 percent growth pace over 2018-19. The Bank also opined that at those rates, growth will be insufficient to achieve poverty reduction goals in the region, particularly if constraints to more vigorous growth persist.
Ethiopia will register the biggest growth of 8.3 percent in Sub Saharan Africa, with Equatorial Guinea being the only country in Africa that is projected to register a negative growth, of -5.9 percent, this year. Tanzania is projected register a growth of 7.1 percent, Mozambique 4.8 percent, Zambia 4.1 percent and Botswana 4 percent. South Africa is forecast to post a modest growth of 0.6 percent, as political uncertainty and low business confidence are weighing on investment.
“Regional inflation is gradually decelerating from a high level, although it remains elevated in Angola, Nigeria, and Mozambique. Inflationary pressures increased in East Africa, due to drought”, says the Bank.
It also forecasts that global economic growth will strengthen to 2.7 percent in 2017 as a pickup in manufacturing and trade, rising market confidence, and stabilizing commodity prices allow growth to resume in commodity-exporting emerging market and developing economies.
“Global financing conditions remain favourable and commodity prices have stabilized. Against this improving international backdrop, growth in emerging market and developing economies as a whole will pick up to 4.1 percent this year from 3.5 percent in 2016”
“Fragile states, e.g., Burundi, Haiti, Zimbabwe, will continue to expand at a slower pace”, the report says.
“The regional outlook is subject to significant internal and external risks. A sharp increase in global interest rates could discourage sovereign bond issuance, which has been a key financing strategy for governments” The Zimbabwean government, for example, has been issuing treasury bills to recapitalise strategic entities and to clear the central bank and government’s legacy debts.
“Weaker-than-expected growth in advanced economies or major emerging markets could reduce demand for exports, depress commodity prices and curtail direct foreign investment in mining and infrastructure in the region. Proposed cutbacks to U.S. official development assistance will be a concern to some of the region’s smaller economies and fragile states”, says the report.