Zimbabwe Reported As One of the Fastest Growing African Economies, Here's How:

With general elections less than two weeks away, Treasury will stick with the current macroeconomic framework, which might not alleviate inflationary pressures for consumers.

Finance Minister Mthuli Ncube revised the gross domestic product projections for 2023 upward by 1,5 percentage points to 5,3%.

According to Ncube, the revised growth rate is driven by agriculture, information and communication technology (ICT), accommodation and food services, and improvements in electricity supply.

Using this revised projection, Ncube said Zimbabwe was now "among the fastest-growing economies in Africa."

Despite high inflation and low production, the country is doing well.

As a result of both demand and supply factors, Zimbabwe's exchange rate depreciated significantly between April and June 2023.

Thus, supermarket prices skyrocketed, making most people unable to meet their basic needs.

As a response, the government liberalized the exchange rate, tightened monetary policy, and introduced gold coins and gold-backed digital tokens.

Despite these efforts, US dollar prices rose about 10% and 25% last month, according to United States Agency for International Development (USAID).

According to Ncube, growth in the domestic economy is projected at 5,3% in 2023.

"ZimStat estimates economic growth for 2022 and 2023 at 6,2% and 6,5%, respectively.

Zimbabwe is among the fastest-growing economies in Africa, with such growth rates

The revised projected growth of 5.3% in 2023 is attributed to strong performance in agriculture (9,7%), ICT (4,9%), accommodation, and food services (20,5%), as well as substantial improvements in the electricity supply situation following the successful synchronization and subsequent commercialization of Hwange 7 and 8 units.

Agriculture was originally expected to grow by 4% in 2023, but now is expected to grow by 9,7%.

It is estimated that the total cereal production, excluding winter wheat, will be 2.6 million tonnes in 2023, a 40% increase over last year's production.

According to Ncube, overall growth in the mining sector during 2023 will be 4,8%, driven by increases in lithium, chrome, diamonds and platinum group minerals.

As a result of a better agricultural season and government measures to tame inflation and exchange volatility, the manufacturing sector is expected to grow by 2,2% in 2023.

The government is taming inflation and exchange rates by deliberately reducing the supply of the Zimbabwe dollar, introducing gold tokens, and lowering foreign currency taxes.

Businesses have been forced to reduce their local currency pricing and instead raise their US dollar pricing as a consequence of the local currency stabilizing against the greenback.

The Treasury increased last week the tax-free threshold from $91 666 to $500 000 per month, with the highest marginal tax rate now applying to incomes above $15 000 000.

As a result of the depreciation of the Zimbabwe dollar in May and June, most private sector businesses are paying wages above that amount.

In a review of the central bank's mid-term monetary policy statement released last week, IH Securities predicted that Zimbabwe dollar payments to contractors, the source of local currency devaluation, would resume after the election.

In order to maintain stability and defend the local currency, the central bank reiterated its hawkish attitude. According to the research firm, competitive rates on wholesale foreign currency auctions will drive steam away from the parallel market in the interim.

In spite of this, we believe that Zimbabwe dollar payments to contractors will resume after the election period, reversing the current liquidity crisis."

A high cost of living and low incomes were still constraining household purchasing power, particularly for households earning local currency.

Zimbabwe among fastest growing African economies, says Ncube - The Standard (newsday.co.zw)

All information above is based on the findings of Zimbabwe's Finance Minister, Mthuli Ncube.  However, American Economist Professor Hanke says that as of August 10, 2023, Zimbabwe's inflation stood at 685%.  The Minister of Finance agreed that inflation is indeed high.