IMF cuts Zimbabwe’s 2021 economic growth forecast, sees 3.1% recovery

Zimbabwe’s economy will recover by 3.1% this year, the IMF says in its latest forecast, slower than the 4.2% that the Fund had projected in October.

The economy will see further sluggish growth of 4% in 2022, according to the latest World Economic Report released Tuesday. Inflation, the IMF says, will end the year at 49.4%, much higher than the 3% that it projected in its last forecast.

Zimbabwe has set an ambitious economic growth target of 7.4% this year, and projects that inflation will be slowed to below 10% by year-end. Annual inflation rate slowed to 240.55% in March from 321.59% in February.

According to the IMF, the Zimbabwe economy shrank by 8% last year, less than its initially projected 10.4%.

In its own forecast released in March, the African Development Bank (AfDB) said Zimbabwe’s economy will recover by a “modest” 4.2% in 2021, but this depends on whether Zimbabwe maintains exchange rate stability and controls money supply growth. The World Bank last year projected economic growth of 2.9% in 2021.

IMF: African economic growth  

Sub-Saharan Africa will grow by just 3.4% this year, as the continent battles the impact of COVID-19, the IMF predicts.

The IMF says: “The pandemic continues to exact a large toll on sub-Saharan Africa (especially, for example, Ghana, Kenya, Nigeria, South Africa). Following the largest contraction ever for the region (-1.9% in 2020), growth is expected to rebound to 3.4% in 2021, significantly lower than the trend anticipated before the pandemic. Tourism-reliant economies will likely be the most affected.”

Trade and tourism, the IMF says, are expected to remain subdued globally until the pandemic is brought under control everywhere.

“Pandemic-related restrictions on international travel and a more general fear of traveling are expected to have lasting effects on income from exported services.”

In the region, the IMF expects the South African economy, which fell by 7% last year, to grow by 3.1% this year and 2% next year. Zambia will grow 0.6% and 1.1% in 2021. Botswana should expect robust growth of 7.6%, after an 8.3% contraction last year.

After an estimated contraction of -3.3% in 2020, the global economy is projected to grow at 6% in 2021 and 4.4% in 2022.