Economy - Zimbabwe could fail to achieve the 9,3 percent economic growth forecast for the year due to a number of macro-economic constraints and political factors. A local research firm warns that all these might take their toll on economic expansion. But the firm conceded the growth would still be as high as between 7,8 percent and 8 percent, compared with 5,5 percent for sub-Saharan Africa. Interfin Securities, in its third quarter equities review, said the economy was unlikely to meet the growth rate projected by Finance Minister Tendai Biti in his 2011 National Budget Statement. Interfin said political risk was likely to increase ahead of elections scheduled for next year and this had the potential to affect the growth of the economy.

'This increased political risk scenario is also likely to weigh on investor sentiment as electioneering campaigns by major political parties are likely to commence in view of elections (scheduled to take place) in 2012,' said Interfin.

Discord among policymakers on the implementation of the initiative could also see investors adopting a wait-and-see attitude, thereby limiting capital inflows.

Cost-push inflationary pressures are also expected to continue, as local industry is still fragile, forcing Zimbabwe to remain a net importer of basic commodities.

This scenario has reportedly exposed the country to exchange risk since the currencies of Zimbabwe's major trading partners have been strengthening.

There was also a feeling that Zimbabwe was subject to more cost-push inflationary pressures emanating from Zesa Holdings' 31 percent hike of power tariffs.

Against this background, Interfin contends that the 4,5 percent inflation target projected by Minister Biti by the end of the year might not be achieved.

Inflationary pressures have been piling up since May on the back of civil servants' wage increases, the firming SA rand and rising prices after import duty was restored on certain basics in an attempt to protect a local fragile manufacturing industry.

Current account and budget deficits are expected to persist until the Government has instituted measures to reduce its consumptive expenditure. This has limited the resources available for capital programmes.

The country is also still far from self-sufficiency with figures from treasury showing a current account deficit of US$2,6 billion in the eight months to August.

During the period under review, the country imported goods worth US$5,3 billion mainly from South Africa and the US, against export receipts of US$2,69 billion.

Moreover, doubts that the economy might not achieve the projected growth stem from the fact that over the course of the year economic growth was being driven by primary industries susceptible to exogenous shocks of the global economy.

Mining and agriculture have underpinned growth thus far.

Zimbabwe's economy is also likely to suffer in the fourth quarter from the contagion effect of uncertainty over decisions on issues affecting the global economy.

Although emerging economies are expected to drive global economic growth, injecting liquidity in the debt-ridden Eurozone would help restore confidence across economies and spur even faster growth in emerging markets.

Golden Sibanda

The Herald/20/11/2011