Zimbabwe Economic Outlook

• Growth slowed in 2011 and is expected to slow further in 2012 because of inconsistencies in policy and political uncertainty.
• Regulations involving the economic empowerment programme and dilapidated infrastructure will continue to constrain the economy.
• Unemployment, especially among the young, has increased in recent years.

Growth slowed in 2011 and is expected to slow further in 2012 in the face of policy inconsistencies and political uncertainty. The subdued growth reflects the challenges facing the economy including limited resources and the high cost of capital; inconsistencies, especially with respect to economic empowerment and indigenisation regulations; dilapidated infrastructure; obsolete technologies; frequent breakdown of machinery; and power and water shortages. These downside risks are further exacerbated by the disputes among the government partners about the new constitution, the national referendum to adopt it and pending national elections. However, in 2013,  economic activities in the agricultural, mining, manufacturing and transport sectors are expected to drive improvements in growth. Even though the government is operating ona cash budget principle, the budget deficit for 2011 improved and is projected to improve further in 2012 and 2013. Inflation should rise but is projected to remain within single digits in 2012 and 2013. Overall, inflationary developments in the short to medium term will continue to be influenced by the USD/ZAF (South African rand) exchange rate, inflation developments in South Africa, international oil prices and local utility charges.

While there are no recent official data on unemployment, it is believed to have increased over the years. Young people aged 15-24 years make up the bulk of the unemployed, accounting for almost 60% of all those out of work in 2004. To deal with the problem, the government adopted a national employment policy framework in June 2010 which integrates youth employment initiatives.