imf-logo.jpgThe revision of the country’s projected growth for this year and the following year by both the government and the international monetary fund IMF has sparked a debate within the business circles with some saying the revised figures are too low while others feel that there are many variables to be considered.

In its April world economic outlook released last week the IMF revised earlier estimates for a 6 % expansion of the Gross Domestic Product for Zimbabwe to 2.2 % in 2010. In revising downwards the country’s growth rate, the IMF cited the rise in inflation as a major reason and also attributed the proposed decline to the political environment currently prevailing. 
In the same month but earlier than the IMF’s revision of the country’s growth rate, the Ministry of Finance had projected that the economy will grow by 4.8 percent revised it downwards from 7.7 %

Of note however has been the difference between government projections and the IMF projections. What is clear is that the IMF has based its projections on misconceptions that the political situation in Zimbabwe is volatile.

 

This is problematic as events on the ground indicate the opposite. Even the rise in inflation appears to have been exaggerated as it would appear that Zimbabwe has suddenly hit two digits. 

Market watchers say such perceptions have a large influence on the projections noting that economic growth should be much higher than 2.2 % judging from the current performance.

Last year saw industry record significant capacity utilization rising from below 10 % to 33.2 % although economic performance has been much more subdued.

Value Vest Managing Director Mr. Hebert Mazonde highlighted that while it is realistic to revise GDP projections downwards there is reason for optimism.

During the 2010 national budget, over US$800 000 000 was under vote of credit and hopes were high that the support from multilateral institutions will assist although currently nothing has materialized forcing the government to dig deeper for resources.