Maravi

Biti raises 2010 economic growth projection again

Biti raises 2010 economic growth projection again
By Kingsley Kaswende in Harare
Mon 27 Sep. 2010, 23:00 CAT

ZIMBABWE’S finance minister Tendai Biti has said the country’s economy will grow by 8.1 per cent this year, almost double the 4.5 per cent he had projected earlier on. This is the third time Biti has revised growth projections for 2010.

While presenting the 2010 budget in December 2009, Biti had said Zimbabwe’s economy would grow by 7.7 per cent in 2010 but in July he revised the figure down to 4.8 per cent, citing several downward risks threatening the economy, including political uncertainty and lack of donor support.

He has now revised upwards the expected growth for 2010 owing to positive performance of the economy in the second half of 2010, driven by a stronger recovery in the key agricultural sector.

“I am pleased to advise that there has been a serious major rebound in the second half of the year such that our growth projections to the 31st of December (2010) will be 8.1 per cent,” he said.

“This is underpinned by a serious rebound in agriculture where we had said 18.8 per cent, we think that it will grow by 34.1 per cent largely as a result of the performance in tobacco where we are going to deliver 120 million kilogrammes.”

Last year, Zimbabwe grew by 5.1 per cent, according to government figures.

There has been a marked improvement in agriculture this year, with tobacco farmers surpassing the target of 70 million kilogrammes with a bigger crop of 120 million kilogrammes, although still far below the 236 million kilogrammes achieved in 2000 at the start of the land seizures.

Biti said the manufacturing, tourism and mining sectors would also register more than anticipated growth, and that the stable inflation rate would see the economy growing much faster than had been initially expected.

Biti’s figures, however, are a contradiction to those of the International Monetary Fund (IMF), which predicts that Zimbabwe will only grow by 2.2 per cent this year.

The IMF earlier this year revised downwards the projected growth for 2010 from the original six per cent to a meagre 2.2 per cent.

The Fund’s projections, as contained in the World Economic Outlook 2010, indicate that the country’s growth would not grow at all into 2011.

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.

Zimbabwe had last year registered its first positive growth in over 10 years when it formed an inclusive government between President Robert Mugabe’s ZANU-PF and Prime Minister Morgan Tsvangirai to end political and economic crises during which the country’s economy reached an all-time low dip of -14 per cent in 2008, according to IMF figures.

The measures that were adopted by the inclusive government, such as the adoption of multiple foreign currencies for trading purposes, stabilised the economy and helped it grow by 5.1 per cent, higher than the projection of 4.7 per cent.

[Without economic sanctions (including ZDERA), there would have been no collapse of trade or the national currency, which would have shown the massive economic success of land redistribution and land democratisation years ago. As it is, just by having a stable currency, without handing back land to the white farmers or having a land audit as the MDC insisted upon, tobacco has bounced back. This is a complete vindication of both the justice and the economic good sense of having land redistribution. Africa will rebound, when it transforms these massive estates into family farms - no more 2,500 hectare estates, but 100 hectare farms. - MrK]

However, the economy continues to face challenges, which include poor performance from utilities, inadequate financial resources to recapitalise companies and low direct foreign investments.

Political uncertainty is also keeping away foreign donor support, with government having to date received just over US $3 million out of the US$810 million it expects from donors this year.

The government had projected that factory performance would increase to levels around 65 per cent by year-end. But Companies have continued operating below the average 35 per cent of their potential capacity.

Labels: LAND REFORM, SANCTIONS, TENDAI BITI, ZDERA

posted by MrK @ 9:52 AM