Mthuli raises 2023 economic growth forecast, despite a dip in HY earnings from key exports

Mthuli Ncube optimistic on economy, but worries remain (pic: Tateguru)

Finance Minister Mthuli Ncube believes the Zimbabwe economy will grow by 5.3% this year, faster than the previously forecast 3.8%, basing his optimism on stronger growth in agriculture and mining plus better power supply.

This is despite new data this week showing a half-year drop in earnings from minerals, the country’s biggest export.

In his mid-term fiscal policy released Friday, Ncube says agriculture will grow by 9.7% this year, better than the 4% he had projected in November last year when he presented the 2023 budget.

“The total cereal production, excluding the winter wheat crop, is estimated at 2.6 million tonnes for 2023, 40% above the production levels achieved last year,” Ncube says.

A report by the Confederation of Zimbabwe Industries in April said power cuts and high interest rates had stifled growth since 2022. Capacity utilisation, a measure of productivity, was flat at 56.1% in 2022, reflecting sluggish economic growth.

Ncube believes this can be reversed due to “substantial improvements in the electricity supply situation, following the successful synchronisation and subsequent commercialisation of Hwange 7 and 8 units”.

Ncube’s optimism on mining growth is based mostly on new production from lithium mines, many of which have gone into production this year. However, his hopes for overall growth from the mining sector may be overly optimistic. Gold, a major export for the economy, is down 11% compared to this time last year, while platinum is facing weaker prices globally.

Data released by central bank on Wednesday showed that mineral exports, which account for the bulk of Zimbabwe’s exports earnings, declined by 12.5% to US$2.6 billion in the first six months of the year.

Earlier this year, the IMF slightly slashed 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.

World Bank forecasts 2.9% growth while the African Development Bank sees growth of 3.2% this year.

Ncube says the government spent Z$478 billion on infrastructure and development projects between January and June this year.