Zim poised for growth in 2005

JOHANNESBURG – Zimbabwe, which has been mired in a deep economic and political crisis, has halted its sharp economic decline and is poised for positive growth from 2005, one of Africa’s top banks said last Thursday.

The country’s gross domestic product has plunged by 30 per cent in the past four years and is expected to fall by five per cent this year, according to the International Monetary Fund (IMF). Stanbic Bank, the Africa trading arm of Standard Bank of South Africa, said in a mid-year review of Zimbabwe that return to positive economic growth was likely, but this depended on the government’s policies.Stanbic has a presence in some 17 African countries and its views on Africa’s economies are among the most authoritative.”A return to positive growth is likely, particularly if efforts to stimulate agricultural production bear fruit and are supported by a more flexible exchange rate,” Stanbic said.”Growth in various economic sectors has been volatile in recent years and broadly negative.It would now seem the sharp rate of decline has been halted and a return to positive growth, off a lower base, is likely in 2005.”Zimbabwe’s economy is in its fifth year of recession as the country battles a deep crisis, partly blamed on President Robert Mugabe’s government’s seizure of white-owned farms for the resettlement of landless blacks.Stanbic said real GDP was expected to decline by 8,5 per cent in 2004, slower than 2003 when it was estimated to have fallen by 13,2 per cent.The bank said the financial sector had remained in a better shape with reduced volatility in growth rates but overall expansion remained closer to zero per cent.The mining sector was seen posting a recovery in 2004 aided by a friendlier exchange rate, it added.Early this year the Reserve Bank of Zimbabwe introduced a foreign exchange auction to tackle a thriving parallel market, helping lift the Zimbabwean dollar to around 3,518 against the US dollar versus 6 000/dollar on the parallel market.But Stanbic said this might not be enough.”To stimulate higher export volumes, the central bank will have to allow the Zimbabwean dollar to depreciate further,” it said.”Narrowing the differential between the auction and the official rate or eliminating the official rate would be one way of achieving this.”Exporters can sell 75 per cent of their hard currency earnings at the central bank auction rate, but the remaining 25 per cent must be exchanged at the lower official rate of Z$824 per US dollar.Mugabe, in power since independence from Britain in 1980, denies charges that he has mismanaged the economy and accuses opponents of sabotage to punish him for seizing white-owned farms.- Nampa-ReutersStanbic Bank, the Africa trading arm of Standard Bank of South Africa, said in a mid-year review of Zimbabwe that return to positive economic growth was likely, but this depended on the government’s policies.Stanbic has a presence in some 17 African countries and its views on Africa’s economies are among the most authoritative.”A return to positive growth is likely, particularly if efforts to stimulate agricultural production bear fruit and are supported by a more flexible exchange rate,” Stanbic said.”Growth in various economic sectors has been volatile in recent years and broadly negative.It would now seem the sharp rate of decline has been halted and a return to positive growth, off a lower base, is likely in 2005.”Zimbabwe’s economy is in its fifth year of recession as the country battles a deep crisis, partly blamed on President Robert Mugabe’s government’s seizure of white-owned farms for the resettlement of landless blacks.Stanbic said real GDP was expected to decline by 8,5 per cent in 2004, slower than 2003 when it was estimated to have fallen by 13,2 per cent.The bank said the financial sector had remained in a better shape with reduced volatility in growth rates but overall expansion remained closer to zero per cent.The mining sector was seen posting a recovery in 2004 aided by a friendlier exchange rate, it added.Early this year the Reserve Bank of Zimbabwe introduced a foreign exchange auction to tackle a thriving parallel market, helping lift the Zimbabwean dollar to around 3,518 against the US dollar versus 6 000/dollar on the parallel market.But Stanbic said this might not be enough.”To stimulate higher export volumes, the central bank will have to allow the Zimbabwean dollar to depreciate further,” it said.”Narrowing the differential between the auction and the official rate or eliminating the official rate would be one way of achieving this.”Exporters can sell 75 per cent of their hard currency earnings at the central bank auction rate, but the remaining 25 per cent must be exchanged at the lower official rate of Z$824 per US dollar.Mugabe, in power since independence from Britain in 1980, denies charges that he has mismanaged the economy and accuses opponents of sabotage to punish him for seizing white-owned farms.- Nampa-Reuters