IMF sees risks to Zimbabwe’s growth forecast as drought bites

(Reuters) – The International Monetary Fund (IMF) said on Wednesday the performance of mining, agriculture and manufacturing posed risks to Zimbabwe’s growth forecast as the nation grapples with a drought and economic slowdown.

A Zimbabwean man, Graham Matanhire, harvests maize from a field in a peri-urban suburb of Mabvuku in Harare, April 10, 2014.   REUTERS/Philimon Bulawayo
A Zimbabwean man, Graham Matanhire, harvests maize from a field in a peri-urban suburb of Mabvuku in Harare, April 10, 2014. REUTERS/Philimon Bulawayo

Zimbabwe has been struggling for five years to recover from a catastrophic recession that was marked by billion percent hyperinflation and widespread food shortages, and some analysts say Zimbabwe could tip back into a downturn this year.

On Tuesday, President Robert Mugabe – the 91-year-old, who has presided over economic collapse and diplomatic isolation since he came to power in 1980 – predicted a major economic take-off with China’s help.

He also reiterated Zimbabwe’s 2015 growth target of 1.5 percent, a forecast halved last month based on the effects of the drought and weak commodity prices.

Manufacturing is suffering as lower-priced South African goods flood the market, and electricity shortages as well as the high cost of capital are forcing companies to close, with the consequent loss of jobs.

“These are all factors, depending on how it continues, that may pose risks to that (growth) outlook,” IMF resident representative, Christian Beddies, told reporters.

The IMF’s own projection of 2.8 percent growth was “impossible” to achieve and was likely to be lowered when an IMF team visits between Aug 31. and Sept. 11 to review Zimbabwe’s progress under a staff monitoring programme, he said.

Zimbabwe, with foreign debt of $9 billion, owes the Fund $111 million and makes token monthly payments of $150,000.

The drought’s impact is looking particularly serious for Zimbabwe, which has a history of food shortages that, independent analysts say, are partly due to Mugabe’s seizures of farmland from white farmers in 2000.

A government and multi-donor report seen by Reuters on Wednesday showed that 1.5 million Zimbabweans, 16 percent of the population, will require food aid by next January.

The figure is three times the number of people who needed help last year, due to a poor harvest of the food staple, maize.

“This assessment estimates the total requirements for all households deemed to have inadequate resources to feed themselves to be equivalent to 112,007 metric tonnes of maize,” the report said.

Zimbabwe plans to import 700,000 tonnes of maize this year.


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