IMF maintains positive outlook for Zimbabwe

THE International Monetary Fund (IMF) has maintained a positive growth trajectory outlook for Zimbabwe in 2021 of 5,1 percent  largely supported by increased agricultural output, energy production and manufacturing and construction activities.

The projections are, however, below Government's expectations of achieving 7,8 percent this year from an initial forecast of 7,4 percent.

The IMF on its part, had initially in June 2021, projected the economy to grow by 6 percent, indicating that the economy was on path to recovery largely due to a bumper harvest of maize.

According to the IMF's "World Economic Report October 2021," the country's GDP growth will remain positive at 3,1 in 2022.

The report noted that global recovery continues but the momentum has weakened, hobbled by the pandemic, with overall risks to economic prospects having increased, and policy trade-offs have become more complex.

"Compared to our July forecast, the global growth projection for 2021 has been revised down marginally to 5,9 percent and is unchanged for 2022 at 4,9 percent.

"The report said that modest headline revision, however, masks large downgrades for some countries and outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics," the IMF said.

According to Finance and Economic Development Minister Mthuli Ncube, the country's strong economic growth trajectory this year is anticipated to spill over, projecting a 5,4 percent growth in 2022.

The economic growth target is consistent with the attainment of Vision 2030 of an upper middle income status by 2030 and meeting the targets of the National Development Strategy 1 (NDS1).

An IMF team led by Dhaneshwar Ghura conducted a virtual staff visit with the Zimbabwe authorities during the period June 1–15 2021 to discuss recent economic developments and the economic outlook.

At the conclusion, the IMF indicated that Zimbabwe had shown resilience in the face of the Covid-19 pandemic and other exogenous shocks.

"The pandemic, on top of Cyclone Idai in 2019, a protracted drought, and weak policy buffers, has taken a severe toll on the economic and humanitarian situation.

"Despite the authorities' timely actions to support the most vulnerable groups and businesses during the pandemic, real GDP contracted by 4 percent in 2020, after a 6 percent decline in 2019.

"However, an economic recovery is underway in 2021, with real GDP expected to grow by about 6 percent, reflecting a bumper agricultural output, increased energy production, and the resumption of greater manufacturing and construction activities," the IMF noted.

The IMF mission also noted the authorities' efforts to stabilise the local currency and lower inflation as well indicating that contained budget deficits and reserve money growth, as well as the introduction of a foreign exchange auction system, are policy measures in the right direction.

The team also noted that Zimbabwe has been a fund member in good standing since it cleared its outstanding arrears to the IMF in late 2016.

Recently, Zimbabwe received US$961 million under the IMF's US$650 billion SDR allocation earmarked to provide additional liquidity to the global financial system.