HARARE – Zimbabwe’s economy grew by 0, 6 percent last year on the back of poor agricultural performance due to an El Nino-induced drought, latest statistics from the Reserve Bank of Zimbabwe (RBZ) show.
The 0, 6 percent gross domestic product (GDP) growth projection is below initial Government projection for that year of circa 1, 6 percent. Data from the central bank show that the mining and construction sectors were key to the registered growth.
But underperformance of the electricity and water sector, in addition to the drought during the course of last year contributed to the low GDP growth.
“The country’s real GDP growth rate is estimated at 0, 6 percent for 2016,” said the RBZ in its just released ‘Economic Review for the fourth quarter of 2016’.
“On a sectoral basis, growths are estimated for mining (6, 9 percent); construction (3, 5 percent); distribution, hotels and restaurants (1, 7 percent); and manufacturing (0, 3 percent).
“Declines are, however, estimated for electricity and water (19 percent) and agriculture (3, 7 percent), reflecting the impact of the drought.”
Last year, the local economy continued to experience structural challenges emanating from the limited sources and high cost of capital; uncertainties arising from policy inconsistencies; dilapidated infrastructure and antiquated technologies.
During the same period, however, the Government initiated and made significant progress on a number of doing business reforms predicated on a World Bank-guided Rapid Results Approach (RRA).
On a positive note, the mining sector – in particular – continues to make signiﬁcant contribution to the country’s economic turnaround since 2009. The average share of mining to GDP grew from an average of 10, 2 percent in the 1990s to an average of 16, 9 percent from 2009 onward.
In 2016, the mining sector was driven by sound performance of the gold and platinum sub-sectors.
Official figures from the Chamber of Mines Zimbabwe show that cumulative gold output stood at 22 747 kilogrammes in 2016, 13, 6 percent more than the 20 023kg produced the previous year.
On the other hand, 2016 platinum output rose to 15 110kg from 12 564kg in 2015. But the Elino-induced drought that affected the 2016 farming season had the biggest negative impact on the local economy.
“The agriculture sector is estimated to have declined by -3, 7 percent in 2016,” said the RBZ.
Another key factor that contributed to the limited growth of the economy last year was the trade deficit.
Analysts project that both the trade and current-account balances are projected to remain largely negative in the medium term as imports rise against a backdrop of low export receipts.
Meanwhile, the country is expected to post higher GDP growth this year, on the back of an improved agricultural season.
“Economic growth prospects for Zimbabwe are spurred by the good 2016/2017 agricultural season, with the national economy projected to grow by 3, 7 percent in 2017,” says the RBZ.
And GDP growth in Sub-Saharan Africa (SSA) is also expected to improve. Growth in the region is projected to rise from 1, 6 percent in 2016 to 2, 8 percent and 3, 6 percent in 2017 and 2018, respectively.
The RBZ has however warned against the possible effects of a volatile global economy.
“The risks to global growth in the outlook period call for accelerated implementation of monetary, fiscal and structural policies tailored to country circumstances, in order to spur productivity and output.”