Zimbabwe will register negative economic growth of -5.2% this year, the International Monetary Fund (IMF) has forecast.
This would be the first time that Zimbabwe suffers a GDP contraction since 2008, when the economy shrank 16.5% at the peak of a hyperinflation crisis.
In its latest World Economic Outlook, the IMF sharply lowers its October forecast for Zimbabwe of 4.2% growth. The IMF forecasts that the economy will register negative growth this year, before growing 3.3% in 2020. According to the IMF, the Zimbabwe economy grew 3.4% in 2018, which is slightly lower than government’s expectations of 4% growth.
This is not the first time that the IMF projected negative growth in recent times. The IMF forecast negative growth of -2.5% for 2017, only to revise its projections to 2.8% growth.
Still, the IMF’s 2019 downbeat forecast makes for dire reading for Finance Minister Mthuli Ncube, who sees economic growth at 3.1% in 2019 and is trying to whip up international support for his reforms. In his 2019 budget, Ncube lowered his own initial optimistic forecasts to take into account the impact of the worst drought in a decade and the initial impact of his austerity measures. Zimbabwe, Ncube said in his budget statement last November, would in 2019 suffer “macro-fiscal vulnerabilities from previous unsustainable fiscal and current account deficits”.
A 150% fuel price hike and currency reforms introduced in the first quarter of the year have severely weakened demand, forcing companies to scale back production. Inflation has shot up to 59.4% in February, although Ncube optimistically expects to slow it down to 10% by year end.
Earlier this year, the World Bank projecting 3.7% growth for Zimbabwe in 2019, while the African Development Bank forecast 4.2% for the year.
However, World Bank now says price hikes will curb Zimbabwe’s growth this year.
“The increases in prices that we have witnessed since October last year will affect the growth rate for 2019. For 2018, in the first quarter the growth was real, but it was then disturbed by the last quarter,” says Marko Kwaramba, country economist for the World Bank.
According to the IMF, sub-Saharan Africa is expected to grow by an average of just 3.5% this year. Zimbabwe’s major trading partner, South Africa, will see only sluggish growth of 1.2% in 2019. South Africa grew by 0.8% in 2018, the IMF said.
Zambia is forecast to grow 3.1%, down from the previously projected 3.5%. Botswana will grow 3.9%, Mozambique 4%, Angola 0.4% and Tanzania 4%.