Zimbabwe’s economy will grow by only 2.5% this year, slower than what government expects, according to a new International Monetary Fund (IMF) forecast.
In the latest World Economic Outlook published on Tuesday, the IMF released its weakest global growth expectations for the medium term in more than 30 years, trimming global growth forecasts and raising concerns about the world economy.
The IMF slightly reduced its growth forecasts for Zimbabwe, saying the economy will grow by 2.5% this year, slower than the 2.8% it had projected late last year.
The IMF’s forecasts are lower than those of the Zimbabwe government. Finance Minister Mthuli Ncube has projected that the economy will grow by 3.8% this year, banking on a recovery in agriculture and mining.
The IMF says the Zimbabwe economy grew by 3% last year, lower than government’s estimates of 4%. The Zimbabwe economy expanded by 8.5% in 2021, says the IMF, matching government numbers for that year.
In a report on Zimbabwe in December, the IMF warned that while some inflationary pressures had been easing in 2022, risks were growing.
“Renewed domestic and external shocks – inflation surge, erratic rainfall, electricity shortages, and Russia’s war in Ukraine – are, however, adversely affecting economic and social conditions,” the IMF said.
A new report by the Confederation of Zimbabwe Industries says power cuts and high interest rates are stifling growth. Capacity utilisation, a measure of productivity, was flat at 56.1% in 2022, reflecting sluggish economic growth.
How does Zimbabwe compare with its neighbours?
Zambia will grow by 4% this year, Botswana by 3.7% and Mozambique, which is benefitting from strong demand for its gas, will see 5% growth. Growth will be 2.8% in Namibia and 2.4% in Malawi.
However, South Africa, whose economic fortunes have an impact on Zimbabwe, is flirting with recession. The IMF dropped 1.1 percentage points off its previous projections on South Africa’s growth, and now sees the regional power growing by only 0.1%.
East Africa is faring better than Southern Africa. Kenya will grow by 5.3%, Rwanda by 6.3%, Tanzania by 5.2%, and the DRC will grow the fastest in the region at 6.3%.