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Business Reporter

Government’s strong projected economic growth rate of 3,8 percent for 2023 remains a huge possibility on account of the positive developments in the mining and tourism sectors, a research firm has said.

FBC Securities in its 2023 economic outlook said while Zimbabwe still faces growth-restricting factors, such as high cost of borrowing, liquidity constraints and perennial power shortages, positive developments within the two sectors will set a solid base for economic growth.

Finance and Economic Development Minister Professor Mthuli Ncube, in the 2023 National Budget Statement projected growth of 3,8 percent in 2023, a deceleration from 4 percent in 2022, on account of the uncertain global economic outlook and potential adverse domestic factors.

He said growth in 2023 was expected to be sustained mainly by mining, construction and agriculture, as well as accommodation sectors.

The mining sector is expected to grow by 10,4 percent this year underpinned by anticipated favourable international mineral prices, as well as increase in investments.

FBC said the Government is working to strengthen the governance framework for the mining sector in order to improve confidence and investment in the sector.

“China’s anticipated increase in economic activity in 2023 will likely bode well for global commodity prices, however, demand concerns remain prevalent as economies grapple with elevated inflation and increasing borrowing costs,” it said.

Global tourism is expected to rise by approximately 30 percent in 2023 as travel normalises post Covid-19 pandemic period.

FBC noted that elevated fuel costs, labour shortages and inflation, all contributing to increased cost of travel, maybe restrictive factors in the recovery of global tourism.

However, it said the local tourism sector is set to benefit from recovery in international tourism, coming in of new players in the aviation sector and meetings, incentives, conferences and exhibitions.

The Government has projected agricultural sector growth at 4 percent in 2023 based on the normal to above normal rainfall forecast, climate-proofing measures under the National Accelerated Irrigation Rehabilitation Programme, as well as the restructuring and transformation of agriculture systems to improve the viability and productivity of the sector.

FBC said by the end of 2022, the country’s agricultural sector was already showing promising signs for the 2022/23 season with just over 465 700 hectares of maize planted by mid-December, compared with just over 215 480 hectares by mid-December in 2021.

“The sector is poised for favourable performance in the current season owing to projections of above normal rainfall and access to Government and private inputs,” the research firm said.

The economy has for the past few months witnessed sustained stability due to slowdown in inflation and exchange rate volatility.

The stability is also a result of Government measures, including the decision to suspend payments to some contractors and increased the bank policy rate and medium-term lending rate to 200 percent and 100 percent, respectively.

The Central Bank has highlighted intentions to maintain its tight monetary policy stance to keep a grip on inflation and exchange rate movements.