Economy To Grow 7 Percent In 2021
Finance and Economic Development Minister, Mthuli Ncube has set a 7.4 percent growth forecast for the economy in 2021 anchored on improved agricultural performance and firmer gold prices as investors are likely to seek shelter in the yellow metal from the uncertainties in the global economy.
The strong rebound is a result of an anticipated recovery from a very low base in 2020, where the economy is set to post a -4.5 percent growth rate as a result of the Covid-19 pandemic disruptions.
Launching the 2021 Pre-budget strategy paper this morning, the finance minister said the forecast was hinged on the gradual recovery of the economy post-Covid-19 lockdowns.
“We are recovering from a very low base of two years of successive droughts. If we look at other economies, its only us that is in this unique position of having two successive droughts. I’m confident that as long as rains are good we are going to meet these growth figures,” he said.
Global trade is expected to grow 8.3percent in 2021 as economies emerge out of the Covid-19 pandemic.
Government has already put in place a three year macro-economic framework targeting growth of an average of 5 percent starting with 7.4 percent in 2021, 5.5 percent in 2022 and 5.2 percent in 2023.
“We want to maintain a growth rate of 5 percent until 2030 and if we do that we will manage to achieve upper middle income status. It’s achievable,” said Ncube.
Drivers of the growth will include the seven pillars of inclusive growth, developing productive value chains, optimizing value of natural resources, infrastructure development, investment into human capital, building effective institutions and pursuing the reengagement agenda with focus on the country’s diaspora.
There are however concerns about the economy’s resilience to sustain such a huge growth projection.
Market watchers have already expressed worry over low levels of investment into the country given that the country is blacklisted from receiving capital from multilateral creditors to give impetus to the moribund economy.
But perhaps the re-dollarization of the economy in recent months could stimulate activity.
Remittance figures have upped 33 percent so far, and they are likely to gain further peak period of the festive season fast approaches.
“In the past few months we have noted the economy de-dollarizing and this has sort of helped the economy to start ticking,” said economic analyst Victor Bhoroma.
The pre-budget strategy paper is a prelude statement giving direction to the National Budget Statement expected to be announced next month by the Finance Minister.