eBusiness Weekly
Business Writer
Zimbabwe is poised to record economic growth in 2022 according to financial firm, Old Mutual Zimbabwe.
The company said this at its latest analyst briefing this week.
“We expect the economy to register growth in 2022 on the back of 2021 economic recovery and reduced impact of Covid-19,” Old Mutual said.
The financial firm, however, noted that there are risks in the long run.
Due to the Russia-Ukraine war the country is bound to feel consequences as a net importer of goods such as fuel and wheat.
Such a situation is going to see inflationary pressures likely to persist fuelled by imported inflation, which will trickle down to fuel and food inflation.
The country is also likely to continue seeing currency shortages as the foreign currency auction is likely to continue having backlogs despite periodical foreign currency injections by the Reserve Bank of Zimbabwe (RBZ).
“Commodity prices remain a key risk to economic growth given the uncertainty in the global economy brought about by the pandemic and geopolitical risks,” Old Mutual said.
The investment group said agriculture output will be lower than prior year given the impact of adverse weather conditions. But added that economic growth is expected in 2022 on account of growth in the construction and service sectors.
Zimbabwe has projected the economy would grow by 5,5 percent this year premised on growth in agriculture, mining and tourism.
Finance and Economic Development Minister Mthuli Ncube, has maintained that the country’s economy will grow by 5,5 percent but analysts and the World Bank believe the margin of growth will be lower than that.
The World Bank projected the economy to expand by below 4,3 percent this year amid rising inflation despite Zimbabwe projecting a higher GDP growth.
But the Bretton Woods institution is seeing a difficult juncture saying the economy was on a declining path.
“This year’s growth is expected to be lower than 4,3 percent due to rising inflation both globally and locally and the potential resurgence of the Covid-19 pandemic which causes the government to impose lockdowns,” World Bank senior economist Stella Illieva said.
Economic growth, Illieva said, remained fragile due to low levels of inflationary pressures, high indebtedness, volatility of commodity prices as well as low vaccination rate which may amplify the situation in case some new variants return.
“In line with the regional and global developments, the country’s economy will not reach pre Covid-19 pandemic level,” she said.
