Zimbabwe’s economy is expected to grow by six percent in 2021 although the outlook for the country remains highly uncertain on the back of several factors, the International Monetary Fund said on Wednesday.
In a statement at the end of virtual Article IV consultations with Zimbabwean officials held between October 25 and November 16, IMF mission chief to Zimbabwe
Dhaneshwar Ghura said the Harare authorities’ “swift response to the COVID-19 pandemic, including through containment measures and support to vulnerable households and firms, helped mitigate its adverse impact.”
“Economic activity is recovering in 2021, with real GDP expected to grow by about six percent, reflecting a bumper agricultural output, increased mining and energy production, buoyant construction and manufacturing activity, and increased infrastructure investment,” Ghura said.
He noted, however, that the COVID-19 pandemic and other factors had taken “a severe toll on the economic and humanitarian situation” in Zimbabwe over the past two years.
“Zimbabwe’s economy contracted cumulatively by about 11 percent during 2019-20 owing to the combined effects of the pandemic, cyclone Idai, a protracted drought, and weakened policy buffers,” the IMF official said.
He warned that uncertainty remained high and that Zimbabwe’s economic outlook “will depend on the pandemic’s evolution—compounded by the economy’s vulnerabilities to climatic shocks—and implementation of sustainable policies.”
“Decisive actions are needed to lock in economic stabilization gains and accelerate reforms.”
Key priorities should include allowing greater official exchange rate flexibility and tackling foreign exchange market distortions, and implementing growth-enhancing structural and governance reforms.
The southern African country has been battling serious distortions in the foreign currency market that has seen a thriving parallel market where hard currencies are traded at a premium of up to 100 percent.
JN/APA