Zim’s economy grew by 5pc in 2023

Business Reporter

ZIMBABWE’S gross domestic product (GDP) for 2023 registered 5,3 percent growth, a slight decrease from the prior year’s 6,1 percent and the previous year’s impressive 8,5 percent, according to figures recently released by the Zimbabwe National Statistics Agency (ZimStat).

The report, which highlights the key industries driving the economy, reflects both the country’s resilience and the challenges faced amidst ongoing global economic headwinds.

In a detailed briefing, Mr Grown Chirongwe, the acting director of ZimStat’s Macroeconomics Division, emphasised the significance of the data in shaping the country’s economic outlook.

“While GDP growth has slowed, this is not a sign of regression but a reflection of macroeconomic stability efforts and diversified growth across multiple sectors,” he stated.

“We continue to see strong performance in sectors such as accommodation and food services, information and communication, as well as transport and storage, all of which are crucial to Zimbabwe’s evolving economic landscape.”

In 2023, the key sectors played an instrumental role in driving economic expansion. Accommodation and food services led the pack, posting a remarkable 26,4 percent growth. The information and communication sector followed, growing by 16,1 percent, while transport and storage contributed 10 percent.

Construction (6,8 percent); wholesale and retail trade (6,6 percent); agriculture (6,3 percent); and mining and quarrying (5,3 percent) also showed strong performance, each contributing significantly to overall GDP growth.

Economist Dr Prosper Chitambara praised these sectors for their resilience and adaptability in the face of shifting global trends.

“The growth in accommodation and food services is a positive reflection of the tourism sector’s recovery, boosted by domestic and international demand. Meanwhile, information and communication are key drivers in today’s digital economy, creating a platform for further innovation and employment growth,” he noted.

Dr Chitambara also highlighted the important role of agriculture and mining, which, though showing modest growth, remain vital to Zimbabwe’s economy.

“Agriculture, with its deep connections to livelihoods and rural development, remains a bedrock of the economy. Mining, driven by global demand for minerals, continues to anchor Zimbabwe’s foreign currency earnings,” he added.

When analysing GDP by value added, five sectors emerged as the top contributors. These are: wholesale and retail trade (19 percent), mining (13,3 percent), agriculture (12,1 percent), manufacturing (10,9 percent), and finance and insurance (8 percent).

This diverse range of high-performing sectors further highlights the complexity

and interdependence of Zimbabwe’s economy.

Ms Gladys Shumbambiri-Mutsopotsi, an economist with an interest in industrial growth, commented on the importance of the manufacturing sector’s role.

“Zimbabwe’s manufacturing sector, though constrained by energy challenges, has shown potential to expand. The focus on value addition within agriculture and mining could bolster this sector even further, helping it achieve higher growth rates,” she said.

Mining, in particular, remains central to the economy’s stability, contributing 13,3 percent of GDP by value added.

“Our mining sector’s performance is commendable, given the global uncertainties and shifting commodity prices. Gold, platinum and nickel mattes are the anchors of this sector, and we expect mining to play an even larger role in years to come, provided that regulatory frameworks remain conducive to investment,” Ms Shumbambiri-Mutsopotsi added.

The expenditure approach to GDP revealed a focus on consumption, capital formation and net exports. Final consumption expenditure for 2023 was estimated at $122,2 trillion, with private households accounting for 74,8 percent ($91,3 trillion) of the total.

Government consumption expenditure contributed 16,5 percent.

Gross capital formation, another critical element of GDP, was estimated at $21,8 trillion. Private sector fixed capital formation made up 48,4 percent of this figure, while Government gross fixed capital formation amounted to $5,8 trillion (26,5 percent). Inventories contributed an additional $5,5 trillion.

Net exports, however, continued to weigh down growth, with a negative estimate of $1,7 trillion. This points to a trade deficit that needs to be addressed for sustainable economic growth. Nevertheless, gross national income for the year was estimated at $132,1 trillion, indicating some positive movement in national earnings.

The GDP figures indicate that the economy is gradually diversifying beyond its traditional sectors. For instance, the information and communication sector’s 16,1 percent growth demonstrates that the country is making strides in embracing the digital revolution.

Mr Tinevimbo Shava, a seasoned economist, emphasised that the digital sector’s rise is crucial for long-term economic stability.

“Zimbabwe’s future lies in digital integration across industries. The growth in information and communication indicates that we are moving in the right direction, but further investment in this sector is critical to maintaining the momentum,” Mr Shava stated.

Despite the positive outlook, challenges remain; the slight reduction in GDP growth from previous years signals the pressures exerted by both local and global economic factors, including inflationary pressures, currency volatility and external debt obligations.

However, as Mr Chirongwe explained, these challenges are being managed through careful policy implementation and continued efforts to stabilise the economy.

“While the 5,3 percent growth represents a slower rate than the previous two years, it is still a robust figure, especially in light of the external shocks the global economy faced in 2023,” said Mr Chirongwe.

“The key for Zimbabwe is to maintain momentum and ensure that policies remain supportive of growth, particularly in the sectors that have shown resilience.”

Dr Chitambara also expressed optimism regarding the future.

“Zimbabwe’s diversified growth across multiple sectors shows the potential to sustain and even accelerate growth in the medium term. It is essential for the Government to continue fostering an environment conducive to private sector growth, while maintaining sound macroeconomic policies,” he said.

While there are hurdles to overcome, particularly in addressing trade deficits and enhancing capital formation, the country’s positive outlook, supported by sound economic management and sectoral growth, suggests that the economy is on the right path towards sustainable development.

As Ms Shumbambiri-Mutsopotsi aptly put it, “The data paints a picture of resilience. Zimbabwe’s ability to navigate through turbulent times, coupled with its sectoral diversity, is its greatest strength.”