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World Bank sees economy growing 4.2 percent

Growth projections optimistic … Patrick Chinamasa presenting 2014 budget

15/01/2014 00:00:00
by The Source
Growth will be lower than govt expects ... Nadia Piffaretti

THE economy is likely to grow by around 4.2 percent this year, lower than the government’s projection of 6.2 percent due to a slowdown in key sectors of the economy, a World Bank official said on Wednesday.

The country’s economy is stuttering in the aftermath of a disputed election last July that extended President Robert Mugabe’s 33-year rule. After growing by 9.3 percent in 2011, it slowed to 4.4 percent in 2012 while projections for 2013 were revised from 5 percent to 3.4 percent.

Finance minister Patrick Chinamasa in his 2014 budget, said Zimbabwe’s economy is seen growing by 6.1 percent this year, rising to 6.4 in 2015 underpinned by new economic plan ZimAsset, and recovery in agriculture, mining and construction.

But the World Bank tempered the 2014 growth prospects as the outlook remains increasingly uncertain due to a host of internal and external factors.

“Amid uncertainty around mineral prices and recovery in the agricultural sector, the baseline projection forecast economic growth at 4.2 percent in 2014,” the bank’s chief country economist for Zimbabwe, Nadia Piffaretti told an economic symposium in Harare.

Growth in the mining sector will be dampened by easing international mineral prices, she said, while development in the sector would also be affected low levels of investment as miners either hold off investment or struggle to access financing for retooling or prospecting.

Last week, world number one platinum producer Anglo American Platinum said it had shelved plans to expand operations at its Unki unit in Shurugwi, including a new $400 million mine, citing the falling price of platinum.

Piffaretti said the manufacturing sector is likely to growth by a 1.5 percent as a result of lower investment levels, declining competitiveness and high interest rates.

Zimbabwe’s fiscal revenues seem to have stabilised around $4 billion, but has higher expenditure pressures. Public debt stands at $6.1 billion, excluding central bank debt and private sector debt, undermining Zimbabwe’s creditworthiness.

“Overall risks remain tilted to the downside emanating from …vulnerabilities in the banking sector, possible financial slippages and the strongly unbalanced external position,” she said.


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