The International Monetary Fund (IMF) has projected a 6% growth for Zimbabwe’s economy this year on higher farm output and a recovery in energy, manufacturing and construction.
The IMF’s latest forecast, released on Wednesday, is an upgrade on its earlier 2021 projection of 3.1% but is still lower than the government’s more ambitious 7.4%.
The IMF previously estimated that Zimbabwe’s economy had shrunk by 8% last year. Now it says the economy contracted by 4%.
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In a statement that followed a virtual staff visit to Zimbabwe from June 1-15, the IMF said:
However, an economic recovery is underway in 2021, with real GDP expected to grow by about 6%, reflecting a bumper agricultural output, increased energy production, and the resumption of greater manufacturing and construction activities.
… Uncertainty remains high, however, and the outlook will depend on the pandemic’s evolution, the pace of vaccination and implementation of sustainable policies.
The IMF said while Zimbabwean authorities have taken commendable measures to stabilise the local currency, more extensive reforms are needed. The IMF said:
The IMF mission notes the authorities’ efforts to stabilise the local currency and lower inflation.
In this regard, contained budget deficits and reserve money growth, as well as the introduction of a foreign exchange auction system, are policy measures in the right direction.
… the mission highlighted that structural reforms aimed at improving the business climate and reducing governance vulnerabilities are essential for ensuring sustained and inclusive growth.
The IMF again said while Zimbabwe has cleared its arrears with the Fund, there will be no fresh credit until it clears its debts with other major lenders.
During the virtual visit, the IMF delegation met Finance Minister Mthuli Ncube, Reserve Bank of Zimbabwe Governor John Mangudya, private companies and donor agencies.