This season’s expected drought and a dip in commodity prices will cut economic growth to 3.5% from the projected 5.3% in 2023, Finance Minister Mthuli Ncube says.
The IMF this week forecast economic growth of 4.1% for Zimbabwe in 2023, higher than its previous forecast of 2.5% but lower than Ncube’s 5.3% projection. But Ncube and the IMF agree on slower growth next year. Ncube, who is attending the annual IMF and World Bank meetings in Morocco, said on Thursday that the IMF’s Zimbabwe growth projection of 3.6% next year is in line with his own projections.
The slowdown will be mostly driven by the impact of an anticipated drought, whose impact would be felt in agriculture and energy.
“Here we are taking into account the impact of El Nino, issues potentially around the energy sector, and other areas where we expect growth to be slow, including the downturn in commodity prices due to the global economic slowdown, particularly in the case of China,” said Ncube.
“But we still expect to show strong growth in manufacturing, infrastructure development and tourism. The slowdown will occur mainly in the agricultural sector and also, in part, the mining sector.”
Mineral exports are already down, pointing to further stress ahead for the economy. Mineral exports fell by 12.5% to US$2.58 billion in the first half of the year, compared to the same period last year, RBZ figures show. Gold deliveries are currently 12% behind last year’s.
New Zimstat data showed that the mining industry had shrunk by 6.1% in the first quarter of 2023, before recovering 4.7% in the second quarter.
Ncube says hopes to sign Zimbabwe to a new staff-monitored programme (SMP) with the IMF by April 2024. An IMF team is expected in Harare this month for initial talks, he said.
“Our intention is that by the time we go for the spring meetings in April 2024 we should have signed off on a Staff Monitored Programme,” said Ncube. “It will focus on maintaining discipline on the fiscal front and continue fine-tuning our exchange rate system and maintaining a tight monetary policy.”
Under the staff programme, Zimbabwe will commit to a set of key economic targets, which it has missed in previous attempts. An SMP is key to a campaign by Zimbabwe to restructure its foreign debt, almost half of which is in arrears.
“We need it (SMP) because it is a key pillar of our arrears clearance agenda. There needs to be a track record that is independently verifiable by the IMF that we have taken certain steps towards comprehensive reforms for us to be able to qualify for support from the creditor countries to clear our debt,” Ncube says.