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Last week, the visiting International Monetary Fund projected that the local economy will this year grow by 7,5 percent, which is an improvement from its 5 percent projection earlier in the year, but still falling short of the 9,3 percent projection by the Government.
IMF’s head of delegation, Mr Vitaliy Kramarenko, who announced the reviewed figure, did not specify the local conditions that had prompted the review.
“Under these policy assumptions and a favourable outlook for commodity prices, the economy is projected to grow by 7,5 percent to eight percent this year,” he said.
At the same time the African Development Bank in its monthly economic review, projected that Zimbabwe’s economy will grow by 7,8 percent this year.
Zimbabwe has in the meantime set itself a target to achieve a US$100 billion economy by 2030 and under this scope it has projected a 15 percent annual growth rate. There is increasing optimism that the target is achievable on the back of a number of projects.
The country needs to address liquidity challenges, capacity utilisation, power supplies, affordable long-term finance, policy consistency, indigenisation, coherence between Government and the private sector to enable sustainable growth.
In view of the IMF’s recent announcements on Zimbabwe, some observers have said that these growth projections are hugely reliant on global economic conditions.
“Our Gross Domestic Product growth is heavily dependent on the demand for and prices of a handful of primary commodities – platinum, gold, diamonds, ferrochrome, tobacco and cotton.
“Much of the growth recorded in these sectors was driven by commodity prices rather than increased volumes,” said one observer.
There may be some justification to this from last year’s data on minerals such as platinum and gold.
For instance, platinum was up 27 percent in volume but 85 percent in value, while gold output doubled but simultaneously saw values increasing 145 percent.
This is perhaps reflective of the slow economic recovery the country is undergoing.
The majority of industries have been facing constraints in respect of access to affordable sources of funding and the use of antiquated machinery rendering their products uncompetitive locally and internationally.
However, another economist, Mr Brains Muchemwa, contends that the local economy is not fundamentally reliant on prevailing global economic conditions.
He also argues that the IMF’s projection for Zimbabwe’s economic growth this year (7,5 to eight percent) is too conservative because of the limited economic perspective of the international financier.
“The main drivers of growth in Zimbabwe at the present moment are not too dependent on global economic conditions.
“The IMF forecasts GDP growth forecasts are too conservative considering the notable progress that is being registered in the services and agricultural sectors, the major drivers of the economy.
“In fact, the IMF Article IV recommendations are just too general, indeed a similar song whose melody is conveniently changed depending on which country they visit, the reason these are never taken seriouslyeven in Europe,” he said.
Mr Muchemwa, however, said it was critical for Government to ensure that the banking sector remains stable to ensure that credit continues to flow into the economy, whilst the multi-currency environment stays toensure predictability and stable pricing.
Online Reporter