ZIMBABWE, which has been mired in an economic and political crisis for over five years, has halted its sharp decline and is poised for positive growth from 2005, one of Africa’s top banks said yesterd
The country’s gross domestic product has plunged by 30% in the past four years and is expected to fall by 5% this year, according to the International Monetary Fund (IMF).
Stanbic Bank, the African 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 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% this year, slower than 2003 when it was estimated to have fallen by 13,2%. The bank said the financial sector had remained in a better shape with reduced volatility in growth rates but overall expansion remained closer to 0%.
The mining sector was seen posting a recovery this year 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.