Zim ups economic growth projections
Harare (New Ziana) – Finance and Economic Development Minister, Professor Mthuli Ncube on Thursday slightly hiked Zimbabwe’s Gross Domestic Product (GDP) growth projection for 2021 to 7.8 percent from the initial 7.4 percent, anchored mainly on robust performance by the agricultural sector.
He said this while presenting the Mid-Year budget review to Parliament.
Ncube said the anticipated growth was on the back of a good 2020/21 agricultural season, and higher global commodity prices among other factors.
From food deficit and imports last year, the country this year expects its biggest agricultural harvest in over 20 years, mainly of the staple maize crop.
“The strong rebound of the economy is anchored on better 2020/21 rainfall season, higher international mineral commodity prices, stable macroeconomic environment and COVID-19 pandemic response measures, including vaccination program.
“Higher growth rates are projected in agriculture, electricity generation, accommodation and food services, as well as financial services,” he said.
Agriculture, riding high on the success of the Pfumvudza farming programme, is now estimated to grow by 34 percent, up from the original 11 percent, with crops such as maize, groundnuts and sorghum also standing out.
Ncube said projections also pointed to a relatively stable domestic supply of power of around 7 859GWh, giving a growth rate of 13.9 percent on the back of improved inflows into Kariba dam and the recent review of electricity tariffs.
Ncube said despite the COVID-19 pandemic, fiscal consolidation measures adopted by government had engendered stability in the economy and had also resulted in a satisfactory budget performance for the half year.
He said the country was on course to meet targets set out in the 2021 national budget.
“Mr Speaker Sir, despite the raging global pandemic, implementation of the NDS1 through the 2021 National Budget remains on course, following a favourable farming season, recovery in manufacturing sector and firming international commodity prices.
“The COVID-19 response measures, coupled with the vaccination exercise currently underway globally and domestically, continue to give hope to the sustained economic recovery,” he said.
“There is need to stay the course. Therefore, there are no policy changes as I believe the existing policies are achieving the desired results and are still adequate. We only need to stay the course, and any substantial policy changes will be introduced through the 2022 National Budget.”
In terms of revenue performance for the six months under review, Ncube said ZWL$198.2 billion was collected against a target of ZWL$182.1 billion, whilst expenditure reached ZWL$197.6 billion, resulting in a modest surplus of ZWL$570 million.
Between January and June 2021, the country received US$746.9 million in diaspora remittances compared to US$288.7 million received during the same period last year.
He said remittances were projected at US$1.3 billion for the full year.
“In the outlook, the budget is anticipated to remain more or less on course assuming limited impact of exigencies and containment of expenditure pressures,” he said.
Ncube said the current price and exchange rate stability would assist local industry to make long term investment decisions and allow for the efficient allocation of resources.
He pledged government’s commitment to pursuing strong monetary and fiscal policies that sustain the current disinflationary path.
“Mr Speaker Sir, fiscal and monetary consolidation measures being implemented by Government to date have managed to firmly anchor inflation expectations as shown by a significant decline in inflation from 837.5 percent in July 2020 to 106.6 percent in June 2021. The July year-on-year inflation is 56.37 percent and 2.56 percent for month-on-month inflation.
“Month-on-month inflation is expected to remain stable at less than three percent during the second half of 2021. Consequently, annual inflation is expected to decline further by end August 2021 and further to between 22 percent and 35 percent by December 2021.”