Price hikes choke Zimbabwe growth prospects: World Bank

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THE World Bank (WB) says the currently spiralling price increases in Zimbabwe will have a negative impact on the country’s growth prospects.

Earlier this year, the World Bank projected that Zimbabwe’s Gross Domestic Product (GDP) would grow by 3,7% in 2019 while Finance and Economic Development minister Mthuli Ncube had put the growth rate at 3,1%.

“The increases in prices that we have witnessed since October last year will affect the growth rate for 2019. For 2018, in the first quarter the growth was real, but it was then disturbed by the last quarter,” WB Zimbabwe country chief economist Marko Kwaramba said.

The WB economist further noted that if government manages to craft appropriate growth policies in terms of macro-economic stability, manage deficits and inflation, the country could grow its economy without the need for external funding.

Kwaramba said Zimbabwe should focus on regional integration in its efforts towards growing the economy and moving away from the status of fragile economy.

“Zimbabwe at World Bank is classified as a fragile economy, but it is not fragile like Sudan or other countries that are in the warzone. The solution that has been propelled by those that have moved from fragility is to focus more on regional integration. So, Zimbabwe is a member of Sadc, African Union and Common Market for Eastern and Southern Africa (Comesa). If we facilitate intra-regional trade, then maybe they will be high growth for Zimbabwe” .

Meanwhile, the World Bank has downgraded Sub-Saharan Africa’s growth prospects to 2,3% for 2018, down from 2,5% in the bank’s latest bi-annual analysis, Africa Pulse.

According to the report, the slower-than-expected overall growth reflects ongoing global uncertainty, but increasingly comes from domestic macro-economic instability, including poorly managed debt, inflation, and deficits, including political and regulatory uncertainty that were having visible negative impacts on some African economies.

“Regional growth is expected to rebound to 2,8% in 2019; it will have remained below 3% since 2015. This issue of Africa Pulse also looks at how fragility is holding back sub-Saharan Africa, and how the digital economy can help the continent move forward,” said WB chief economist for Africa, Albert Zeufack.

“The digital transformation can increase growth by nearly two percentage points per year and reduce poverty by nearly one percentage point per year in sub-Saharan Africa alone. This is a game-changer for Africa.”

Growth picked up in some resource-intensive countries like the Democratic Republic of Congo and Niger, as stronger mining production and commodity prices boosted activity alongside a rebound in agricultural production and public investment in infrastructure.

In other countries, like Liberia and Zambia, growth was subdued, as high inflation and elevated debt levels continued to weigh down on investor sentiment. In the Central African Economic and Monetary Community, a fragile recovery continued as reform efforts to reduce fiscal and external imbalances slowed in some countries.

Non-resource-intensive economies such as Kenya, Rwanda, Uganda and several others in the West African Economic and Monetary Union, including Benin and Côte d’Ivoire, recorded solid economic growth in 2018.