Zimbabwe’s projected economic growth in 2012 depends on a stable political environment which could be undermined if a contentious general election takes place, the African Development Bank (AfDB) said in a monthly review released on Thursday.
Finance Minister Tendai Biti expects the economy to expand by a further 9.4 percent in 2012 from a forecast 9.3 percent last year, mainly on the back of a rebound in agriculture and mining. Inflation is projected to average 5 percent this year.
The southern African country has been on a recovery path since 2009 when long-time ruler President Robert Mugabe agreed to share power with his rival, Prime Minister Morgan Tsvangirai, after disputed 2008 polls and in a bid to reverse a decade-long economic slump.
The AfDB said while international commodity prices would be key to Zimbabwe’s economic growth prospects, internal policy decisions, such as Mugabe’s drive to give control of foreign owned firms to locals, could hurt the economy.
“The on-going implementation of the indigenisation and economic empowerment laws and the expected national elections in 2012 continue to weaken external investor confidence,” the AfDB said in its review of Zimbabwe’s economy.
“The achievement of the 2012 projections is therefore subject to a stable political and economic environment … and continued firming of the international commodity prices or increase in output.”
Analysts say the empowerment laws, mainly targeting foreign-owned mines and banks, are holding back investment into the country and restraining economic growth.
Mugabe has however vowed to press on with the policy, which he argues is necessary to address imbalances created by colonialism. Critics have dismissed the policy as a political ploy to harness support ahead of elections.
The veteran ruler, in power since independence from Britain in 1980, wants elections this year to end a fragile three-year power-sharing government he has frequently described as dysfunctional.
However, Tsvangirai and regional leaders who brokered the power-sharing deal insist fresh elections can only be held after the adoption of a new constitution as well as broad electoral and media reforms.
A referendum on a proposed new constitution is expected sometime this year after a long-drawn-out process of drafting the charter which has suffered countless delays due to lack of funding and constant wrangling between the coalition partners.