Economic stability key to Zim growth prospect

Published: 16 January 2014

The 2014 policy driven national budget forecast's the country to grow by 6.4 percent this year, with economists saying macroeconomic stability is a key factor to the success of this growth prospect.

According to survey conducted by BH24, economists and financial analysts share a general sentiment that a stable macroeconomic environment is a key factor to the growth prospects of the country and that any instability may cause grievous effects to the economy.

"The major concern is on the banking and financial sector which is in a very fragile position that any shock in the economy may cause a collapse in the banking system and therefore harm the economy," said Felix Mufunda, an economist from the Ministry of Finance.

The Minister of Finance and Economic Development Patrick Chinamasa said last year since there is political stability, the investment climate is likely to improve and the continued clarification of the indigenisation policy will also boost investor confidence.

Other analysts are of the view that stability is not enough but that the serious sourcing of external finance and capital inflows is the major concern for the economy.

According to the Solow Swan economic growth model, capital is vital to the life blood of the economy and at this moment as long as there are low savings and low capital, the likelihood of the economy growing is at risk.

However, the initiative by the Ministry of Finance to revive the interbank market and the Reserve Bank`s lender of last resort role, if implemented successfully together with an increased level of FDI, will result in a sustained economic growth.
- bh24

Tags: Chinamasa,