Zimbabwe projects double economic growth rate in 2025

THE Government estimates that the economic growth rate is expected to double next year as the country recovers from a devastating drought and benefits from rising manufacturing activity.

The Gross domestic product will probably expand by 6,5 percent in 2025, from an estimate of two percent this year, the Ministry of Finance, Economic Development and Investment Promotion said in a policy paper.

The worst drought in 40 years led to crop failure and increased food insecurity, and President Mnangagwa declared a state of disaster in April.

The nation is seeking assistance from the World Food Programme and millers have said they will need to import about 1,4 million tonnes of corn to meet demand.

The southern African nation’s economy is “expected to benefit from the recovery in agriculture, attributable to the expected normal to above-normal rainfall season, as well as increased activities in the manufacturing sector, which will benefit from investments in new steel production”.

The agriculture sector is forecast to grow by 23,6 percent next year, compared to an estimated contraction of 21,2 percent this year.

A unit of China’s Tsingshan Holding Group recently started to produce steel at its new plant in central Zimbabwe.
The report also flagged the April introduction of a new bullion-backed currency, the ZiG, as a key step in its de-dollarisation programme and attempt to “re-establish a mono-currency regime, backed by a domestic currency that can spur domestic production and boost exports by making local products more competitive in international markets”.

While the ZiG has “significantly stabilised the macro-economic environment”, medium to long-term soundness requires consistent implementation of policy reforms, well-managed liquidity injections into the domestic market, foreign-currency generation and supply, the ministry said.

A budget deficit of 1,5 percent of GDP is expected in 2025, with revenue collections of ZiG103,2 billion ($7,5 billion) and expenses of ZiG111,7 billion forecast.

Zimbabwe’s debt stock amounted to ZiG287,2 billion, 58,7 percent of which comprised external obligations, at the end of June.

To support de-dollarisation, taxpayers will be required to settle a large portion of their obligations in local currency, while other taxes and payments for Government services will need to be paid exclusively in ZiG. – Bloomberg.