Zimbabwe: RBZ Sees 3 Percent Economic Growth Despite Fuel, Power Challenges

18 February 2020

Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya is optimistic the country's economy will grow by 3 % in 2020 despite unresolved problems affecting industry and the economy.

Speaking during a Monetary Policy Statement presentation in Harare Monday, the central bank boss said good rains in the current agricultural season will also boost economic growth.

"The economy managed to achieve a sustained decline in month on month inflation since October 2019 and relative stability on the exchange rate. This trend is consistent with a positive economic outlook for the country which is set to grow by around 3 % in 2020," he said.

The projection comes despite the economy having contracted by 6 % last year, according to the International Monetary Fund.

In 2019, the economic crisis deepened, characterised by crippling power outages of up to 18 hours a day, an acute foreign currency shortage, and fuel shortage, reduced production and runaway inflation which is now inching towards 500%, according to independent estimates.

These negative factors have not yet gone.

The World Bank has painted a gloomy economic picture for Zimbabwe adding that without international assistance, the nation will sink into deep crisis.

Official statistics also state that gold deliveries to Fidelity Printers and Refiners (FPR) for the period January to 31 December 2019 were 28 tonnes, registering a decline of 17% from 33 tonnes recorded during the same period in 2018.

A recent 2020 Manufacturing Sector Survey by the Confederation of Zimbabwe Industries discovered that 78% of the country's firms predicted the economy will be in a recession in 2020 with 92% projecting the persistence of the inflation mode.

According to the survey, manufacturers singled out two issues which have not been holistically addressed in the MPS. These are foreign currency shortages and power outages as major factors choking growth.

But despite the concerns, RBZ is also confident growth will be achieved on the back of increased international prices of key minerals produced in Zimbabwe, namely gold, platinum and palladium, and coupled by the stable foreign exchange generation capacity of the economy.

"RBZ is confident that this year's agricultural out-turn will be much better than initially anticipated due to improved rains received in January and February in most parts of the country," he added.

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