Zimbabwe's economy seen growing at a faster 2.7 pct in 2016 - CNBC Africa

Zimbabwe's economy seen growing at a faster 2.7 pct in 2016

Southern Africa

by Reuters 0

President Robert Mugabe must be relieved by news of expected growth for 2016. PHOTO: Wikipedia

Zimbabwe expects economic expansion to quicken to 2.7 percent in 2016 on the back of modest growth from all economic sectors, while gold output is expected to hit a 21-year high, Finance Minister Patrick Chinamasa said on Thursday.

The Southern African country has cut this year's growth forecast by half to 1.5 percent after a drought hit agriculture and weak commodity prices reduced earnings from mineral exports while power shortages have affected industry and mines.

Chinamasa said Zimbabwe required a higher growth rate to recover from a decade of economic decline between 1999-2008, when the economy contracted by 45 percent.

"The economy is projected to grow by 2.7 percent in 2016 from 1.5 percent this year. Almost all the sectors are expected to register reasonable growth of between 1.3 percent and 4.5 percent," Chinamasa said in his budget speech.

Chinamasa said he planned to spend $4 billion in 2016 and would raise $3.85 billion from taxes. The $150 million deficit, which is equivalent to 1.1 percent of GDP, would be financed through domestic borrowing.

The finance minister said negative inflation would remain in 2016 due to weak consumer demand, tight liquidity and competition from cheaper goods from South Africa, whose rand currency has depreciated against the U.S. dollar.