ZIMBABWE can achieve high economic growth projections, only if, it maintains policy consistency, and manages inflation and exchange rate stability, an economist has said.
The Treasury expects the economy to grow by 4,3% in 2023 supported by strong activity in the mining sector. The growth forecast also reflects the positive impact of structural reforms in agriculture and energy.
This comes as exchange rate pressures, while still remaining, have stabilised in recent months owing to the government limiting the amount of local currency liquidity in the market.
Senior economist and economic policy advisor Busie Gomez told businessdigest on the sidelines of the Insurance Institute of Zimbabwe annual conference in Victoria Falls on Monday that the country needed to reduce its reliance on imports.
“So, in the sub-Saharan African region, we see an improvement in the GDP (gross domestic product) growth over the coming year, 2024 and this is hovering on average 4%,” she said.
“The IMF (International Monetary Fund) report states that the Zimbabwean economy is going to grow by around 3,5% in the coming year.
“This is going to be achievable on the background of policy consistency, price stability, and through the relevant monetary policy authorities because inflation and exchange rate instabilities contributed a lot to the non-achievement of some of the GDP projections over the past few years.”
Gomez said geopolitical influences could affect the attainment of these GDP projections.
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“But, the risk mitigation measures that can be taken advantage of are the non-reliance of imports from other countries because the government right now is saying let's grow our own food,” she said.
Gomez said if the country reduced the importation of food; it would take away the risk of geopolitics and would be able to achieve the GDP growth envisaged by the International Monetary Fund (IMF) and similar bodies.
She said for the manufacturing sector to thrive, the government needed to be clear on the future of the auction system.
“It brings in a bit of uneasiness and lack of confidence for the people in the manufacturing sector, who are dependent on the auction system to supply them with the relevant foreign currency or importation of their inputs or raw materials,” Gomez said.
“So, it affects the confidence and also for the manufacturing sector capacity to produce as required. So, the GDP projection can be achieved but there are certain sectors that may be affected by certain policies, either policy reversals or delay in policy announcements of certain issues.”
This is coming at a time when the government was forced to extend the multi-currency regime to 2030, after banks stopped lending in foreign currency, which nearly led to the collapse of some firms.
“Let's start first and foremost at the planning of our country. We have a vision 2030 and NDS (National Development Strategy 1), which is running until 2025,” Gomez said.
“So those are the development documents or development visions that we as a country are looking at ahead of the vision that the government has put in place.
“Government cannot plan over and above what is already on the ground. So it depletes the purpose of planning. So, they have to plan within that time frame. For me, five years is not a long time.
“It's really a short time, especially for products that involve investment over a number of years so it’s a good start, but it’s not the best,” she said.