Watch live as Gambakwe media looks at the June 2021 report by the world Bank titled: Zimbabwe Economic Update (ZEU) – Overcoming economic challenges, Natural Disasters and the Pandemic.
This is an adaptation of an original work by the World Bank Group. Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by the World Bank Group.
Some Zimbabweans who were involved in compiling the report:
Obert Pimhidzai – Senior Economist
Farai Sekeramayi – Program Assistant
Cybil Mabadza – Graphic Design
Marko Kwaramba – Macro-economics
Poverty Analysis –
Monetary Section –
Chenjerayi N. Sisimayi- Healthcare challenges
Ruth Wutete – Social Protection
Tapfuma L Jongwe – Education Analysis
Easther Chigumira – Food Security
Key Points from the 62 Page report
- The update covered the pandemic (2020-2021) and pre-pandemic (2019) periods.
- The update identified actions that could sustain growth in Zimbabwe.
- Growth will accelerate in 2022.
- The Zimbabwe economy declined by 8% in 2019.
- Quasi fiscal activities resulted in money reserves increasing by 217% (Fuel Subsidy, Loans to SOEs, Financial support to gold miners, discounting treasury bills held by private players).
- In 2019 The ZWL lost value by 70%
- There was a surplus in the external current account for the first time since 2019.
- In 2020, Annual inflation of 557% was more than double the inflation rate of 2019.
- In 2020, significant increase in formal remittances led to an improvement in a current account balance.
- In 2020, the number of extreme poor was over 7.9 Million.
- Over 500 000 Zimbabweans lost their jobs.
- The foreign exchange auction helped to stabilize the exchange rate.
- The RBZ put in place restrictions on internal mobile money transfers and suspended the sale of Old Mutual shares.
- In 2020, Inflation reduced from over 800% to the current less than 200%.
- Page 29 of 62 in the ZEU has a timeline of the corrective actions.
Looking into the Future
- Growth is expected to be 3.9% in 2021 and 5.1% in 2022.
- Inflation is expected to fall to 86% in 2021 from 557 in 2019.
- Agriculture sector is expected to spearhead Zimbabwe’s economic growth.
Required actions to sustain growth
- Improve revenue collection
- Eliminate subsidies
- Keep wage growth constant below inflation
- Reduce policy inconsistencies
- Restructure and privatize SOEs
- Discontinue forex retention policies
Key Risks going forward
- The emergency of the third wave will impact economic growth in 2021.
Important factors for growth
- Re-engagement with international partners
- Prudent fiscal policy and rule based monetary and foreign exchange policies.
- Reserve Bank of Zimbabwe must limit money supply growth by reducing quasi fiscal activities and monetary financing.
- There should be more policies supporting structural transformation such as the removal of forex retentions.
- Reforms in the recently approved National Development Strategy is a priority.
Missing In this report
- The report does not touch sufficiently on the impact of sanctions on the economy and the poor.
- The report did not sufficiently compare the situation in Zimbabwe to other Southern African countries.
- The update does not sufficiently address the structural issues in Zimbabwe that lead to lack of production ( Gaps in the supply chain, Low production, foreign ownership of key sectors of the economy and reliance on imports).
- The recommendations by the world bank are defensive rather than aggressive. They will not result in the level of growth that Zimbabwe needs (above 50%).
- The report does not acknowledge that the actions that need to be taken in Zimbabwe are political rather than economic, specifically addressing the ZIDERA sanctions.
- The report does not sufficiently deal with the actions needed to grown a middle class through SMEs.
Please click on the report below to scroll through the 62 pages:Overcoming-Economic-Challenges-Natural-Disasters-and-the-Pandemic-Social-and-Economic-Impacts