adminbillion. But economists interviewed yesterday forecast the GDP would be about 40 percent lower.
The economy will also remain under pressure from mounting political uncertainty, indigenisation fears and low foreign direct investments.
“I think that this growth target is highly ambitious and (I) expect GDP growth to be less than 4 percent this year,” said Mr Ritesh Anand, an economist with Invictus Securities.
“The political and regulatory uncertainty continues to undermine growth and investment.”
Zimbabwe’s economy has been on the rise since 2009 following dollarisation, after succumbing to successive recessions during the previous decade.
The period between 1999 and 2008 was characterised by hyperinflation, and is normally referred to as a “lost decade”, as the economy contracted by more that 40 percent.
Major drivers of economic growth have been the mining and agricultural sectors, and are likely to remain so, with mining, in particular benefiting from high global commodity prices and capital injections.
Mr Anand said Zimbabwe needs foreign investment across all sectors.
“Debt is both expensive and short term and does not lead to sustainable growth. Ongoing issues in the mining sector have led to a significant decline in investment and growth while the agricultural season has been disappointing,” he said.
“Manufacturing, financial services, and property remained depressed due to liquidity constraints. Tourism is the only sector showing some signs of growth.”
An economist with BancABC, Mr James Wade, said the downward revision of the GDP would be mostly related to poor farm harvests.
Tight liquidity has seen banks cutting credit, which would impact on growth.
“The downturn is mostly related to agriculture,” he said. “The cutback in initial targets will impact on the GDP.
“We have been projecting maize output of 1,8 million tonnes and we are now on one million and this was a result of adverse weather impact in some parts of the country.”
Tobacco will register growth but will not match the projected 150 million kg. Cotton output is also likely to be lower than expected output.
The International Monetary Fund recently estimated the GDP would expand by 4,7 percent, while the African Development Bank said the 9,4-precent growth forecast was unrealistic, considering political uncertainties.
In its 2012 National Budget analysis, FBC Securities noted that the 9,4 percent growth was more “theoretically judged than practically confined”.
The FBC analysis suggested the raising of excise duty on tobacco and royalties on gold and platinum might deter meaningful investments.
Excise duty on locally produced cigarettes was increased from US$7 to US$10 per 1 000 sticks, with effect from December 1 last year.
The excise duty on imported cigarettes was also raised from 40 percent plus US$5 per 1 000 sticks to 40 percent plus US$7 per 1 000 sticks.
To improve revenues, royalties on gold and platinum were increased from 4,5 percent and 5 percent to 7 percent and 10 percent respectively.
“Economic growth is assumed to be driven by mining and agriculture developments,” said FBC. “At record, tobacco production contributed the bulk in agriculture performance, with platinum and gold topping in the mining development.
“Raising of excise duty on tobacco and royalties on gold and platinum might deter investments.”
Online Reporter