AfDB cuts Zimbabwe’s 2024 growth forecast amid drought and debt concerns – The Zimbabwe Mail

HARARE, – The African Development Bank (AfDB) has revised down Zimbabwe’s economic growth forecast for 2024 to 2%, a significant reduction of 1.6 percentage points from its previous projection.

This adjustment comes in response to a combination of factors including drought, weak commodity prices and substantial debt.

In its Africa Outlook report just released according to NewZwire, the AfDB highlighted that Zimbabwe’s GDP grew by 6.1% in 2022 and 5% in 2023. However, the bank anticipates a sharp decline in 2024 due to the reduction in agricultural production caused by El Niño. -induced drought.

“Downside risks are elevated due to drought caused by El Niño weather patterns that have affected the agricultural sector, while unstable international commodity prices pose additional risks to the mining sector,” the AfDB said. The bank projects that inflation in Zimbabwe will average 24.9% in 2024 as the exchange rate stabilizes.

Despite the AfDB’s forecasts, the Zimbabwe government maintains a more optimistic outlook, expecting growth of 3.5% in 2024. However, Finance Minister Mthuli Ncube has acknowledged that this estimate could be revised downwards. if the impact of the drought continues to worsen.

According to the AfDB, the global economic slowdown poses a significant risk to Zimbabwe’s economic prospects. The country must focus on stabilizing its currency to restore economic stability.

“Zimbabwe expects to adopt an IMF Staff Monitored Program (SMP) in the second half of 2024. Maintaining the stability of the ZiG exchange rate and eliminating the RBZ’s quasi-fiscal operations and transferring all its liabilities to the Treasury could underpin macroeconomic stability. ”, notes the report.

Growth in the Southern Africa region is forecast to rise slightly from an estimated 1.6% in 2023 to 2.2% in 2024 and 2.7% in 2025, reflecting a modest improvement of 0.1 point percentages for both years compared to the January 2024 forecast.

The AfDB, which is at the forefront of efforts to secure an arrears clearance deal for Zimbabwe, has called for comprehensive reforms of the global financial system to help indebted economies like Zimbabwe.

“Multilateral external arrears in many countries have reduced access to concessional financing from international financial institutions. “The normalization of relations in many cases requires the clearance of arrears before a country can regain access to new financing,” the report underlines.

In Zimbabwe, this situation has exacerbated solvency problems, turning them into a liquidity crisis, leading to exchange rate pressures and hyperinflation. The AfDB highlighted the need for reforms in the international financial architecture to offer more flexibility to countries with accumulated arrears that urgently need emergency financing.

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