Economic growth projections revised downwards

According to the IMF’s World Economic Outlook report released last week, the fund said Zimbabwe’s economy would grow by 2.2 per cent from the projected six per cent.

In February, the IMF restored Zimbabwe’s voting rights ending a seven-year suspension, but ruled out any financial assistance until Harare clears about US$140 million in arrears and shows consistent economic reforms.

The grim outlook by the Bretton Woods institution comes on the backdrop of rising annual inflation which in March spiked to 3.7 percent up from -0.7 percent.

Zimbabwes Finance Minister Tendai Biti last week also said the government was likely to revise economic growth forecast from 7.7 percent to 4.8 percent.

Biti blamed the slow-down in economic growth on political uncertainty, which he said, had kept away foreign donor support.

Zimbabwe registered its first growth in a decade last year after a new coalition government between President Robert Mugabe and Prime Minister Morgan Tsvangirai implemented measures, including the adoption of multiple currencies that doused hyperinflation.

Gross Domestic Product (GDP) last year grew by 5.1 percent compared to an earlier projection of 4.7 percent, but the economy has since then suffered because of unending political disputes between Mugabes Zanu (PF) party and Tsvangirais MDC, that are holding back badly needed foreign investment and donor support.

A controversial plan to force foreign-owned firms to transfer majority stake to local blacks is expect to inflict further damage to the limping economy.

Zimbabwe Stoke Exchange (ZSE) chief executive, Emmanuel Munyukwi, last week said the economic empowerment plan had scared off investors, with many putting transactions on hold until there was clarity on the empowerment scheme.

Under the plan, foreign-owned firms have until May 15 to submit plans of how they intend to transfer 51 percent stake to blacks over the next five years.

Zanu (PF) backs the plan and wants it implemented immediately, while the MDC wants the scheme suspended to allow for more consultation and the drafting of new empowerment regulations that will not scare away business.