Commodity price declines, reversals of capital inflows, banking system instability and political disturbances are among the key factors mentioned by the bank.
Speaking at an economic outlook symposium last week, WB country economist for Zimbabwe, Nadia Pifferetti, said growth in 2012 will be driven less by the dynamics of the 2009 to 2011 economic rebound and hinges more on the presence or absence of long-term drivers of sustainable growth.
“Zimbabwe’s favourable evolution in 2011 continued to be supported by exogenous factors, including higher gold, platinum, tobacco and cotton prices and favourable weather conditions supporting recovering agricultural output,” Pifferetti said.
“However, the external position remains precarious, with a current account deficit of 23,4% of GDP (Gross Domestic Product).” She said gross official reserves, including International Monetary Fund Special Drawing Rights allocation, were at US$197 million as at December 2011, representing 0,3 months of imports yet the minimum figure should be three months.
The World Bank’s observations come at a time when the government intends to achieve an economic growth rate of 9,4% and retain an inflation figure below 5% this year.
The bank also postulates that commodity prices and trade are the main channels through which shocks would be transmitted to African countries, including Zimbabwe, while high and volatile local food prices are also a cited as a source of vulnerability.
the economic liberalisation and introduction of a multi-currency regime in 2009, led the country to register remarkable progress towards macro-economic stability between 2010 and 2011.
Pifferetti noted that during 2011, Zimbabwe continued to benefit from the renewed stability as the Consumer Price Index for the third year in a row, remained substantially stable.
Domestic prices rose moderately as the 12-month change at the end of 2011 was 5,4%.
The bank urged the government to support recovery through fiscal expenditure aimed towards rebuilding basic services and public goods as well as removing obstacles to foreign direct investment flows.