World Bank urges Zimbabwe to accelerate economic reforms amid subdued economic outlook

World Bank urges Zimbabwe to accelerate economic reforms amid subdued economic outlook

By Xinhua

HARARE: Zimbabwe’s medium-term outlook points to subdued economic growth which requires continued implementation of economic reforms, the World Bank said Wednesday.

Economic growth is projected to slow to 3.5 percent in 2024 from 4.5 percent in 2023, as agricultural output is expected to suffer from depressed global growth and the impact of the El Nino-induced drought, the World Bank said in its fourth Zimbabwe Economic Update report launched in Harare, Zimbabwe’s capital, Wednesday.

The World Bank also forecast Zimbabwe’s economy to remain stagnant at 3.5 percent in 2025.

According to the World Bank, Zimbabwe’s economy has seen a strong economic rebound since the COVID-19 pandemic, making it one of the fastest-growing economies in the Southern African Development Community (SADC) over the past three years.

Eneida Fernandes

Its economic outlook, however, now appears moderate, weighed down by global headwinds, structural bottlenecks, weather-related shocks and price and exchange rate volatility, the World Bank said.

“To sustain economic growth, Zimbabwe must continue tackling its macro-economic challenges. Addressing price and exchange rate volatility and public debt arrears will support economic growth and job creation. This will help the country to address poverty, vulnerability and food insecurity rates, which remain high,” said World Bank country manager for Zimbabwe Eneida Fernandes at the launch of the report.

Fiscal pressures may result in an expansionary policy, which could increase volatility, impacting private sector activity and growth, the World Bank warned.

“Climate change shocks may also lower economic output, particularly in the agriculture sector. Continued economic reforms will be essential to mitigate these risks, including adjustment and rebuilding foreign exchange reserves,” the bank said.

It commended the Zimbabwean government for significant progress in implementing economic reforms, including requesting an International Monetary Fund (IMF) Staff Monitored Program which is expected to start in the first half of 2024.

It also commended Zimbabwe for establishing a market-determined foreign exchange rate regime, ending quasi-fiscal operations and unbudgeted expenditure and maintaining a tight monetary policy and sound fiscal management, among other economic reforms.

The global lender, however, cautioned on the need for continued progress on the economic, governance and land reforms to restore macro-economic stability and help resolve Zimbabwe’s pressing arrears and debt problems.