ZIMBABWE has enormous economic potential with minerals, gold, agriculture, and tourism being its main foreign exports.
Historically, agriculture and the manufacturing sector were the major drivers of the economy. The manufacturing sector contributed 20pc to GDP on average between 1980-2000, but its share in GDP has declined to around 10pc.
The demise of the manufacturing sector over the years can be attributed to costly public utilities, frequent power outages, outdated machinery and technology and expensive logistics.
Mining industry remains a key driver as it contributes about 10pc to GDP and 60pc of exports, mostly in the raw form.
Tourism is also an important industry but is on the decline since the land reforms programme in 2000.
After a decade of contraction from 1998-2008, the economy recorded real growth of more than 10pc per-year in the period 2010-13 but then it slowed to roughly 3pc in 2014 due to poor harvests, low diamond revenues, and decreased investment.
Lower mineral prices, infrastructure and regulatory deficiencies, a poor investment climate, a large public and external debt burden, and extremely high government wage expenses hampered the country’s economic performance in 2015.
2016 was characterised by a continuous political and economic crisis. FDIs continued on a free fall and GDP more than halved to 0.5pc in 2016 from 1.1pc in 2015 as the country continued experiencing economics crisis.
The high cost of production eroded economic competitiveness and is feared to stagnate between 2017-18.
According to the World Bank, Zimbabwe’s economy is projected to grow by 2.5pc in 2017 but it is constrained by macro-economic imbalances. The Bank expected the economy to grow by 3.4pc in both 2018 and 2019.
The IMF has revised upward its 2017 growth forecast to 2pc from the earlier projection of 2.5pc contraction but the economic situation is increasingly fragile. The poor performance of government revenues against a background of high recurrent expenditure led to a large fiscal deficit.
The fiscal deficit for 2016 is estimated at 7.3pc of GDP. The IMF warns that excessive government spending, if continued, could exacerbate the cash scarcity, further jeopardise the health of the external and financial sectors.
The government is hopeful that in 2017, the economy is set to turn around from the slowdown mode to modest growth led by key sectors of mining and agriculture, benefitting from the anticipated normal to above normal rainfall.
The overall GDP growth is, therefore, projected at 3.7pc in 2017.