In its first contraction since 2008, Zimbabwe’s economy will fall by 7.1% in 2019, according to the latest forecast by the International Monetary Fund released on Tuesday.
Zimbabwean authorities, a few weeks ago, had predicted a 6.5% economic contraction for the same period, down from earlier optimistic projection of an 3.1% GDP growth.
This year will be the first time that Zimbabwe suffers a GDP contraction since 2008, when the economy shrank 16.5% at the peak of a hyperinflation crisis.
While not much detail was shared in the latest report, an IMF team led by Mr. Gene Leon visited Harare from September 5 to 19 to conduct the Article IV Consultation and review progress under the Zimbabwe’s Staff-Monitored Program (SMP).
At the end of the mission, Mr. Leon issued the following statement:
"Economic difficulties have continued throughout 2019, exacerbated by severe weather shocks.
"GDP growth in 2019 is expected to be steeply negative as the effects of drought on agricultural production and electricity generation, impact of cyclone Idai, and the significant fiscal consolidation to correct past excesses serve to drag on growth."
The IMF also noted that social conditions had deteriorated sharply, with more than half of Zimbabwe’s population (8.5 million people) estimated by the UN to be food insecure in 2019/2020.
Weakening confidence, policy uncertainty, a continuation of FX market distortions, and a recent expansionary monetary stance has increased pressure on the exchange rate, said Leon.
He recommended that policy actions are "urgently needed to tackle the root causes of economic instability and enable private-sector led growth."
Efforts will need to be intensified on both economic and political fronts to drive Zimbabwe forward, said the IMF.