Mixed messages over economic growth

Analysts are
divided about
the prospects
for the
Zimbabwean economy.
The Economist
Intelligence Unit predicts it
will grow by an average of
3% between 2017 and 2021
– with room for more.
In its report on the
country, the Economist
says the “well below
potential” 3% forecast
“ref lects infrastructure and
agricultural constraints
and a poor business
climate”.
It warns that the risk
of sporadic unrest is also
rising, in part because of
the lack of political change
(with the 92-year-old
Robert Mugabe due to
stand again in 2018).
After moving into
negative territory in 2015,
inf lation is expected to
average 5% a year in 2017-
21, ref lecting commodity
price trends and ongoing
domestic wage demands.
The World Bank is more
optimistic
– predicting
economic
growth of
3.5% in 2017,
followed by
two years of
3.4% growth.
However,
the
International
Monetary
Fund (IMF)
is predicting
the economy will decline by
2.5% in 2017.
The forecast, made in the
October 2016 IMF World
Economic Outlook, would
see Zimbabwe recording
its first gross domestic
product contraction since
2008, when the economy
shrank by 16.5% at the
height of a hyperinf lation
crisis.
Zimbabwe’s economy
grew by an average 10.35%
between 2009 and 2012
after
dollarisation
and under
a powersharing
government
between
president
Robert
Mugabe
and the
opposition.
Growth
started
tapering off with the
collapse of the national
unity government after
Mugabe and his ZANU-PF
party were re-elected in
2013 with a larger majority
in a vote disputed by the
opposition.
With most foreign
investors seeing the
country as a major risk due
to political uncertainty
and the collapse of the
infrastructure in large
parts, there are no
sustainable drivers for
economic growth.
Urbanisation, which is
contributing to growth
and rising living standards
elsewhere on the continent
is minimal.
With formal sector
unemployment widely
believed to be running
at over 80%, people are
staying on the land in order
to feed themselves.
As a result Zimbabwe
is one of four African
countries that are
experiencing urban growth
of less than 2%, according
to the African Development
Bank’s African Economic
Outlook 2016.
The others are Djibouti,
Mauritius and Swaziland.
INSERT
Zimbabwe is one of
four African countries
that are experiencing
urban growth of less
than 2%.