AFDB Optimistic About Zimbabwe's Projected Economic Growth

The African Development Bank is optimistic about Zimbabwe’s projected 7.8 percent economic growth rate saying growth is underpinned by increased mineral production, benefiting from favourable international commodity prices and expanding global commodity demand.

In its monthly economic review on Zimbabwe for July, the regional bank said growth is buoyed by high prices of gold, nickel, platinum and chrome ore.

Yesterday gold was selling at US$1 767.20 per ounce and platinum was selling at US$1 806 per ounce on the international market.

The AfDB added that the commissioning of Unki Platinum mines that is yet to commence full-throttle operations is expected to boost the country’s platinum output in 2011.

Zimbabwe has the second largest platinum reserves in the world after South Africa, as well as huge deposits of gold, diamonds, coal, copper, nickel and tin.

“Similarly, increased tobacco, cotton and sugar output is projected to spur agriculture sector recovery,” said the bank.

Zimbabwe was once the largest exporter of tobacco in the world. The country started experiencing positive economic growth rates in 2009 after adopting the multiple currency system.

Anticipated growth in the global economy, in 2011 coupled with continued firming of international commodity prices, is expected to further boost domestic production, with further spin-off benefits on employment levels, enhanced per capita incomes and improved standards of living.

Zimbabwe’s mining sector is expected to grow 44 percent in 2011 despite lack of funds for recapitalisation and refurbishment of mining equipment.

The sector is also suffering from unsustainable costs of production and uncompetitive investment environment and serious skills shortage.

Lingering uncertainties around compliance with the country’s economic empowerment and indigenisation requirements is also having a negative impact on the mining sector.

During the period under review, the bank said retail prices of fuel in Zimbabwe dropped slightly from an average of U$1.45 per litre to US$1.40 per litre of petrol and US$1.35 per litre to US$1.25 per litre of diesel.

The bank says this trend is, however, not in response to the changes in the international oil prices for the month of June 2011, given that some local traders buy forward while others buy in cash and there are time lags in delivery.

“Fuel prices could have fallen in response to reduced demand this season as travel is minimal and no major agricultural activity is occurring, since only a few farmers are now into winter farming,” said the bank.

Fuel prices in Zimbabwe generally fluctuate in response to small declines in international fuel prices.