ZIMBABWE’S economy is expected to rebound next year, the International Monetary Fund (IMF) said at the weekend.
The IMF said the country’s gross domestic product would grow by 4,2 percent next year , a strong rebound from a slump of 10,4 percent it projects this year owing mainly to Covid-19.
In its October regional economic outlook report for Sub-Saharan Africa, the IMF said the country, like the rest of the region, had faced an “unprecedented health and economic crisis” as a result of Covid-19.
Titled “A difficult road to recovery,” the Breton Woods institution report says the sub-regional economy was expected to contract by three percent this year, but grow by 3,1 percent next year.
“This outlook is subject to some key downside risks, particularly regarding the path of the Covid-19 pandemic, the resilience of the region’s health systems, and the availability of external financing,” the IMF said.
“Policymakers aiming to rekindle their economies now have fewer resources at their disposal and will likely face some difficult choices.”
It added: “Where the pandemic continues to linger, the priority remains to save lives and protect livelihoods. For countries where the pandemic is under greater control, limited resources will mean that policy makers aiming to rekindle their economies will face some difficult choices. Both fiscal and monetary policy will have to balance the need to boost the economy against the need for debt sustainability, external stability, and longer-term credibility. Financial regulation and supervision will have to help crisis-affected banks and firms, without compromising the financial system’s ability to support longer-term growth. And these efforts must also be balanced against the need to maintain social stability while simultaneously preparing the ground for sustained and inclusive growth over the long term.
“Navigating such a complex policy challenge will not be easy and will require continued external support.
“Indeed, without significant assistance, many countries will struggle to simply maintain macroeconomic stability while meeting the basic needs of their population.
“In this context, the IMF has moved swiftly and disbursed about US$17 billion so far in 2020—which is about 12 times more than we typically disburse each year — to help cover a significant portion of the region’s needs and to catalyse additional support from the international community.”
The IMF lauded Zimbabwe for being one of the countries that improved the reach and responsiveness of social protection programmes during the period through the use of mobile money and electronic cash transfers.
The Zimbabwean government has said the economy performed much better than expected when the Covid-19 outbreak peaked and has in turn forecast the economy to slump by 4,5 percent this year, and grow by a whopping 7,4 percent next year.
The recovery is expected to be driven by improved consumption and investments.
— New Ziana and STAFF WRITER