NewsSouthern AfricaZimbabwe sets ambitious economic growth target


Posted on Wednesday, 10 August 2016 12:40

Zimbabwe sets ambitious economic growth target

By Nqobile Bhebhe

Photo©AP/SIPAZimbabwe says it plans to grow its economy by 6.6 per cent over the next two years, a huge ask for a country whose economic growth has been on a downward spiral in the last two years, only growing by 1.5 per cent last year.

There was optimism for the beleaguered southern African country after the economy grew by 10.6 per cent in 2012, but since then it has been on a downward trend, managing 4.5 per cent in 2013, 3.1 per cent in 2014, 1.5 per cent a year later and is projected to achieve 1.1 per cent this year.

The strategy targets an average annual growth rate of 6.6 per cent between 2016 and 2018

But this has not stopped the country's confidence that it is able to achieve a significantly higher growth rate, with the government crafting a new interim poverty reduction strategy paper for 2016 to 2018.

State media reported that agriculture, hunting and fishing, manufacturing, electricity and water, construction, finance and insurance, real estate, distribution, hotels and restaurants and transport and communication will spur the growth.

"The strategy targets an average annual growth rate of 6.6 per cent between 2016 and 2018, with 2017 and 2018 projected to grow by 9.5 per cent and 8.9 per cent, respectively," reads part of the document crafted by the Ministry of Finance and Economic Development.

The policy measures also target annual inflation of 0.6 per cent, food reserves of at least three months' import cover by 2018 and a budget deficit of 1.2 per cent of gross domestic product in 2017 and 2018.

However, government face an uphill task to achieve the set goals.

Zimbabwe, has been forced to revise downwards its economic growth targets in successive years due to underperformance owing to structural deficiencies such as rundown infrastructure and discord within government over its foreign direct investment policy, seen as a bane to sustainable growth in the medium to long term.

With constrained liquidity in the economy, industrial capacity utilisation remains at an all-time low, estimated at between 25 and 30 per cent, a sign that very little manufacturing of local products is taking place, leaving the country to rely on imports.

In June, Zimbabwe banned the importation of hundreds of items from its southern neighbour – South Africa to reign in its ballooning trade deficit — $3.3 billion in 2015 — and to shore up local manufacturers.

The new strategy will run concurrently with the economic blue-print, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset), which has missed all of its targets since implementation in 2013.

The five-year blueprint runs to the end of December 2018.

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