Government says the economy should still meet its 5.5 percent growth target for this year as earlier projected despite new global spillovers that have pushed inflation higher than expected.
In his 2022 National Budget statement presented in November last year, Finance and Economic Development Minister, Mthuli Ncube set growth for the current year at 5.5 percent on strong recovery from the COVID-19 pandemic dip.
Inflation was expected to take a nosedive to 32.6 percent by end of year from 60 percent in 2021 although developments in Western Europe have since pushed up price of oil and other commodities like wheat and maize.
Speaking to the press via zoom this morning, the minister said the government would not review growth targets as yet, despite the new global developments.
“We watch the numbers. We are not rushing to revise those figures. So we are going forward with subsidies to lessen the burden on the prices. We will make any changes if we feel there is a need as we continue to monitor the situation,” said Prof. Ncube.
There is pressure by market watchers for government to revise its initial projections which were not conscious of the war in Ukraine at the time.
Oil prices soared after Russia invaded Ukraine, with the price of Brent crude oil – the global benchmark for prices – hitting a near 14-year high at one point.
The Zimbabwe Energy Regulatory Authority (ZERA) had to make upward reviews of fuel price twice in a space of a week.
Even before the Ukraine war started, inflation was already getting out of hand in Zimbabwe after having slowed down for much of last year.
Month-on-month inflation for February reached 7 percent, the highest since August of 2020.
OLD Mutual recently projected that Zimbabwe’s inflation will close the year at 105 percent with Morgan&Co also estimating that inflation will exceed 100 percent in 2022.
However, Government is banking on subsidizing price of oil to minimize the impact of price hikes on the economy.
“It’s costly but it’s worth it. It has allowed us to lower the cost. I don’t have the exact figure here (of how much government has spent on subsiding fuel) but this has been going on for some time and we intend to continue taking the hit,” said the minister.
The Minister is currently in Dubai together with President Emmerson Mnangagwa who officiated at Zimbabwe’s National Day at the ongoing Dubai 2020 Expo yesterday.
