Zim economy to grow 3,2pc – AfDB

26 May, 2023 - 00:05 0 Views
Zim economy to grow 3,2pc – AfDB African Development Bank (AfDB)

eBusiness Weekly

Business Writer

Zimbabwe’s economy could grow by 3,2 percent this year, according to the African Development Bank (AfDB), slightly  lower than what Finance and Economic Development Minister Mthuli Ncube projected in his presentation at the Roundtable on Zimbabwe Debt Arrears Clearance held in Egypt this week.

Zimbabwe initially projected the economy would expand by 3,8 percent, before lifting the estimates to 4 percent as a result of increased farm output and power supplies.

In the African Outlook Report 2023 launched on Wednesday this week at the sidelines of the ongoing AfDB annual meetings in Egypt, the bank projected the country’s gross domestic product (GDP) would accelerate by 3,2 percent this and next year. In revising the growth outlook, Finance and Economic Development Professor Mthuli Ncube had factored in improved farm yields, and in particular a 58 percent increase in maize output as well as improved power production from additional units at Hwange thermal plant. However, Hwange Unit 7 suffered a series of setbacks during its commissioning and is yet to churn out the 300 MW it is designed to generate.

This has delayed the launch of unit 8, which also has the same production capacity.

According to the AfDB, the pace of Africa’s economic recovery was dampened by tightening global financial conditions, elevated inflation, and supply chain disruptions stoked by the Russia/Ukraine conflict and subdued global growth.

The effect of these factors was reinforced by the growing impact of climate change and extreme weather events.  The average GDP growth was estimated at 3,8 percent in 2022, down from  4,8  percent in  2021  but above the global average of 3,4 percent.

Updated estimates also show that growth in  31  of the continent’s 54  countries, including the two biggest economies, Nigeria,  and  South  Africa,  weakened in  2022, and three countries—Libya, Sudan, and South Sudan— went into recession and faced prolonged growth decelerations sparked by internal imbalances and  COVID-19.

Libya also experienced declines in oil production due to blockades of several major ports and oil fields by protests that began in April 2022. In addition to the three countries experiencing a recession, three others recorded rapid growth deceleration:  Morocco, 6,8 percentage points, Botswana 6,1, and Zimbabwe 5,5.

Morocco’s deceleration was attributed to drought, and Botswana’s to declines in both mining and non-mining output and an ebbing base effect.  Zimbabwe’s growth slowdown was attributed to low agricultural output due to drought and persistent domestic macroeconomic imbalances, the bank said.

Despite the persistence of shocks, Africa will consolidate its economic recovery,  with growth projected to stabilize at  4,1  percent in  2023–24, or  0,1 percentage points higher than the earlier projection of  4  percent reported in  January this year. The report noted that Southern Africa faces significant headwinds to growth, ranging from structural weakness in South Africa, high debt in Zambia and Zimbabwe, and adverse weather conditions, including cyclones in Malawi and Mozambique.

Growth is therefore estimated to have remained tepid in 2022, declining to 2,7 percent from 4,4 percent in 2021. South Africa, the region’s largest economy (60 percent of the region’s  GDP)  and main trading partner,  recorded a  2  percent real  GDP  growth in  2022,  less than half the growth rate in 2021 (4,9 percent), due to subdued global demand, power outages, and devastating floods that affected industrial production in Kwa-Zulu-Natal. A build-up in inflationary pressures also affected household consumption spending,  a  key driver of growth in  South  Africa.

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