2011 growth forecast

A respected UK-based watchdog has downscaled Zimbabwe's projected 2011 economic growth to 5.4 percent, saying populist indigenisation policies had weighed down on economic revival.

The newly released report, Zimbabwe Business Forecast Report Q3 2011, provides detailed analysis of the state of the Zimbabwe economy, revising downwards the projected economic growth of 10.9 percent in 2011 to 5.4 percent.

The Companies and Markets watchdog said the insistence by the government that it intends to implement a set of indigenisation regulations adversely affected direct foreign investment into Zimbabwe.

"Uncertainty over the laws has hit investor confidence, and we have revised our 2011 real GDP growth forecast for Zimbabwe primarily due to the fact that foreign direct investment inflows have been negatively impacted," the report says.

The southern African nation's economy grew by 5.1 percent in 2009 after a decade of negative growth rates. Zimbabwe had set the 2010 economic growth forecast at 7.7 percent because of projected higher direct foreign investment, but the populist indigenisation regulations changed that.

The market analysis said Zimbabwe, despite a resurgent inflation spiral, was not on the path to hyperinflation, which peaked at 500 billion percent in December 2008, and projected a year-end inflation target of 7.7 percent.

"Our core scenario sees end-2011 inflation climbing to a relatively benign 7.7 percent y-o-y. This will provide some solace to consumers and businesses after years of hyperinflation. That said, upside risks to our inflation outlook do exist in the form of supply-side shocks."

Post published in: Business

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