Business / Economy
Zimbabwe requires 7% average growth rate
04 Jul 2014 at 12:13hrs | Views
Zimbabwe needs a medium and long-term average growth rate of 7 percent if the Government is to significantly reduce poverty and improve the standard of living, an expert has said. African Institute for Agrarian Studies (AIAS) executive director Professor Sam Moyo said there was a need for the country to boost its economic growth in the long-run.
"To make significant progress in reducing poverty Government will have to sustain average growth rates of about 7 percent and above in the medium to long term and this will require minimum investment rates of 25 percent of GDP," said Moyo.
Moyo was speaking at the United Nations Conference on Trade and development (UNCTAD)'s launch of the 'Economic Development in Africa Report 2014' Thursday evening.
According the African Development Bank's Zimbabwe Economic Outlook, the country achieved an average Gross Domestic Product growth rate of 7,5 percent during the economic rebound of 2009 - 2012. However this is has tapered off over the last couple of years, with various agencies including the Government projecting between 2 and 4 percent GDP growth. Moyo urged Government to enhance investment channels.
Zimbabwe's investment rate currently stand at 14,8 percent of GDP, significantly below the required average investment rate of at least 25 percent of GDP. Despite the depressed economic performance, the country has seen a slight increase in the levels of private sector investment.
There has been a marginal increase in private sector investment rates over the past two decades. Moyo said this was a result of the resuscitation of key parastatals mainly in the mining, energy and telecommunications sectors. "Investment rates during the 1990's from the private sector were around 12,7 percent and 7,6 percent was from the public sector of GDP.
"Gross Capital Formation as a percentage of total GDP private sector increased in the period 2000 to 13,4 percent, but the State remains stagnant. As a share of GDP the State's share increased substantially and a lot of this reflects to some extent not only in the land reform but also the re-emergence of key parastatals in the mining sector as well as in energy and telecommunications," he said.
Meanwhile, the Economic Development in Africa Report 2014 shows that although Africa has made some progress in achieving the goals set out in existing development frameworks, overall the continent is yet to realise the broad vision set in the Millennium Development Goals (MDG).
"To make significant progress in reducing poverty Government will have to sustain average growth rates of about 7 percent and above in the medium to long term and this will require minimum investment rates of 25 percent of GDP," said Moyo.
Moyo was speaking at the United Nations Conference on Trade and development (UNCTAD)'s launch of the 'Economic Development in Africa Report 2014' Thursday evening.
According the African Development Bank's Zimbabwe Economic Outlook, the country achieved an average Gross Domestic Product growth rate of 7,5 percent during the economic rebound of 2009 - 2012. However this is has tapered off over the last couple of years, with various agencies including the Government projecting between 2 and 4 percent GDP growth. Moyo urged Government to enhance investment channels.
Zimbabwe's investment rate currently stand at 14,8 percent of GDP, significantly below the required average investment rate of at least 25 percent of GDP. Despite the depressed economic performance, the country has seen a slight increase in the levels of private sector investment.
There has been a marginal increase in private sector investment rates over the past two decades. Moyo said this was a result of the resuscitation of key parastatals mainly in the mining, energy and telecommunications sectors. "Investment rates during the 1990's from the private sector were around 12,7 percent and 7,6 percent was from the public sector of GDP.
"Gross Capital Formation as a percentage of total GDP private sector increased in the period 2000 to 13,4 percent, but the State remains stagnant. As a share of GDP the State's share increased substantially and a lot of this reflects to some extent not only in the land reform but also the re-emergence of key parastatals in the mining sector as well as in energy and telecommunications," he said.
Meanwhile, the Economic Development in Africa Report 2014 shows that although Africa has made some progress in achieving the goals set out in existing development frameworks, overall the continent is yet to realise the broad vision set in the Millennium Development Goals (MDG).
Source - BH24
