Harare, (New Ziana) – Zimbabwe said on Thursday it expects the economy to rebound with 7.4 percent Gross Domestic
Product (GDP) growth next year anchored on deeper economic reforms, recovery from climate and Covid 19 shocks, and global business upturn.
A global economic slowdown this year caused by the Covid-19 pandemic, coupled by a devastating drought, sent the country’s economy into a -4.1 percent tailspin.
But resenting a $421.6 billion 2021 national budget to Parliament on Thursday, Finance Minister Professor Mthuli Ncube said this year’s economic setback will be reversed next year on expectation of receding Covid-19, global economic recovery and good agricultural output.
“Economic growth is expected to rebound in 2021 from the consecutive two-year slump to record 7.4 percent,” he said.
“From supply side, this growth will be driven by strong recovery in agriculture, mining, electricity, construction, transport and communication as well as finance and insurance.”
The electricity and water sector, at 18.8 percent, is expected to register the biggest growth, followed by agriculture and forestry at 11.3 percent, mining at 11 percent and construction at 7.2 percent.
Running under the theme, “Building Resilience and Sustainable Economic Recovery”, the 2021 national budget marks government’s first step in the implementation of the country’s new five year- economic blueprint, the National Development Strategy 1.
To drive production, Ncube announced a cocktail of measures including stimulus packages for agriculture and manufacturing industries, tax and import duty relief to manufacturers and road rehabilitation funds.
“In line with economic rebound projected in 2021, formal employment is projected to grow with about 150 000 formal jobs expected to be recovered after having been lost due to COVID-19 pandemic,” the finance minister said.
“Similarly, incomes are also expected to rise, with per GNI per capita expected to increase to US$1 835 from current levels of US$1 156.”
Inflation is expected to slow down from over 400 percent now to 135 percent next year on an annual basis, and to below one percent on a monthly basis.
This will be on the back of price stability, which is expected to continue, riding on the back of the foreign currency auction system which has stabilised the local currency.
Tax relief measures, which include a doubling of the tax free threshold on pay and bonus, are expected to help stimulate demand.
Ncube said top priorities for government for next year will centre around inclusive growth and macro-stability, developing and supporting productive value chains, social protection, human capital development and well-being, ngagement and re-engagement, optimising value on natural resources and infrastructure, information communication
technologies and the digital economy.
The $421.6 billion budget will be funded almost entirely from local government revenue sources, with a deficit of $30.8 billion projected.
The deficit, Ncube said, would be met through domestic financing.
In terms of ministerial budget allocations, primary and secondary education, at $55.2 million, got the biggest share, followed by health and childcare at $54.7 million, agriculture $46.3 billion, transport and infrastructural development at $30 and defence at $23.8 million. – New Ziana