ZIMBABWE’S growth is expected to be between 1% and 2% this year with agriculture and commodity prices projected to have an impact on the actual outcome, an economist said yesterday.
According to the World Bank projection, the economy will grow by 3,2% this year.
Speaking at the Confederation of Zimbabwe Industries (CZI) 2015 Economic Outlook symposium, economist Tony Hawkins said it was too early to call how agriculture would perform though some of the indicators, such as the overhang in the tobacco market, late planting, erratic rains and floods were a cause for concern”.
“In 2015, if there is any growth at all it will be minimal, though there are two potential swing factors that could significantly impact the actual outcome: the agricultural season, and commodity prices,” said Hawkins, a professor of business at the University of Zimbabwe.
Hawkins said some commodity prices such as gold could spring upside surprises though that seems unlikely.
He said the country was a small, open economy, gross domestic product (GDP) growth depended greatly on external events, commodity prices, the weather, global economic growth, corporate strategies and risk perceptions.
Hawkins said GDP growth averaged 9% between 2009 and 2012. It is set to average 3% annually possibly even less in the 2013-2016 period.
Hawkins said the country’s excessive debt which is 100% of GDP is correlated with slower growth.
Going forward, Hawkins said government should prioritise employment creation over wage growth, restructure foreign debt, reduce reliance on foreign borrowing and should restructure its finances at local as well as national level.
Hawkins said if the dollar continues to strengthen the country competitiveness deficit would widen.
In his National Budget presentation for 2015, Finance minister Patrick Chinamasa projected the agricultural sector to grow by 3,4% due to the increase in output for maize, tobacco and cotton among other crops.
Tobacco has been a major driver in the agricultural sector since 2009 with growers increasing output and the hectarage.
In 2014, the hectarage rose by 21,2% to 107 371 hectares in 2014 compared to 88 626 hectares in 2013. A total of 216 million kilogrammes of flue-cured tobacco was produced last year and $610 million was realised at an average price of $3,68 per kilogramme.
The mining sector is expected to have a moderate growth of 3,1% due to the increase in mineral output of resources such as nickel, gold, chrome and coal.