Economy grows 1,3 percent in Q3

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ZIMBABWE’S economy grew by 1,3 percent during the third quarter of 2023, latest figures from ZimStat show.
The national statistics agency said the main drivers of economic activity during the period were the energy sector, manufacturing and ICT.
Electricity production, a key indicator of the electricity industry’s value-added, grew by 12,7 percent in the third quarter.
“This growth is attributed to the increased electricity generated from Hwange unit 7 and 8,” ZimStat said.

The manufacturing sector recorded a growth of 6,1 percent, “primarily due to increased production in the food and beverage sub-industries”.
The information and communication sector grew by 33,9 percent, primarily driven by the increasing adoption of technology solutions across the country, while the financial services sector grew by 8 percent and transport saw growth of 27,4 percent.
Sectors that slowed down during the period included construction, mining and agriculture.
The construction sector contracted by 36,7 percent on the back of cement shortages.
“Cement is a coincident indicator of construction activities,” ZimStat said.
Mining declined by 2,4 percent, “primarily due to reduced production of iridium, coal diamond, and chrome.
Agriculture was down 14,5 percent “due to seasonal patterns wherein a limited number of crops are harvested during the third quarter of 2023”.
The Treasury expects the economy to grow by 5,5 percent in 2023, a slight upward revision from the August projection of 5,3 percent, on account of better-than-expected output in agriculture, in particular, tobacco, wheat and cotton.
However, economic growth is expected to slow down to 3,5 percent in 2024, mainly owing to the anticipated impact of the El-Niño phenomenon being forecasted for the 2023-24 summer cropping season on agricultural output, as well as declining mineral commodity prices attributable to the global economic slowdown.
The International Monetary Fund (IMF) also sees growth at 3,56 percent next year.
The Bretton Woods institution said the southern African nation’s economy has continued its post-Covid recovery, but enhancing its longer-term growth potential would require strong reform efforts.
The international lender, however, projected real GDP to grow by around 4,8 percent this year, supported by strong activity in the mining sector and — reflecting the beneficial impact of structural reforms — in agriculture and energy sectors.
The findings followed after an IMF staff team led by Wojciech Maliszewski conducted a staff visit in Harare from October 18 to 25, 2023 to discuss recent economic developments and the economic outlook.

The mission said the outcome of the staff visit will serve as a key input in the preparations for a Staff Monitored Programme.
“As external conditions worsen, the economic outlook will even more crucially depend on progress toward macroeconomic stabilisation and transformational structural reforms.
“Local-currency inflation and exchange rate pressures have abated in recent months, following significant price increases and exchange rate depreciation in the second quarter of 2023,” the IMF said.
Meanwhile, the World Bank estimates that Zimbabwe loses 6,1 percent of gross domestic product (GDP) per year to power shortages.
According to the institution’s projections, electricity demand will grow from 1 950 megawatts (MW) in 2022 to 5 177 MW by 2030, driven primarily by growing demand from the mining and agriculture sectors, resulting in a considerable widening of the power deficits.
The country ― with an electrification rate of 53 percent ― has over the past few months been experiencing its worst power crisis on record, with businesses and households having to endure load-shedding of up to 12 hours a day.
Zimbabwe mainly relies on hydro and thermal energy sources but antiquated electricity infrastructure, decades of non-maintenance, foreign currency shortages, legacy debt, sub-economic tariffs, and climate change-related factors, have led to power generation being supplemented by imports and independent power producers.
Declining water levels at the country’s largest hydropower station in Kariba have resulted in a significant drop in generation, which has led to power shortages in both Zimbabwe and Zambia. Other smaller power plants built before independence have been mothballed.
The WB said the losses to power outages comprise 2,3 percent of GDP in generation inefficiencies and excessive network losses, and 3,8 percent of GDP on the downstream costs of unreliable energy.

“Electricity deficits are particularly damaging for the mining sector, given its highly energy-intensive characteristics, so that unreliable and expensive electricity supplies reduce the margins of existing operations and weigh heavily on the feasibility evaluations for expansions and new projects,” the Bretton Woods institution said in its latest Zimbabwe Economic Update report.
“Power shortages also significantly hurt the agriculture and agro-processing sector by undermining irrigation, together with cold chain and storage facilities.
“Tourism is also affected as hotels, resorts and tourist attractions face disruption of essential services. Overall, these effects translate into lower economic growth and lower household incomes.”
The WB said if the country hopes to achieve the high growth rates needed to move toward upper middle-income status by 2030, it will be critical to realise stable and reliable electricity access.
Finance minister Mthuli Ncube said the region is short of electricity and called for reforms in the sector to crowd in investments.
“The role of the private sector should not just be confined to the production of power but also transmission. As government, we need about US$2 billion to upgrade our transmission infrastructure,” Ncube said.
He added that government is implementing reforms to enhance domestic electricity production through tariff reviews, governance reforms and promotion of independent power producers — prioritising renewable energy.
“The potential of renewable energy is vast and we as government, working with the private sector should accelerate the investments that are being done by independent power producers. We have already given them a framework,” the Treasury chief said.
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