Mid-Term budget projects increase in GDP

By ZBC Reporter

The Midterm Budget and Economic Review statement presented by the Minister of Finance and Economic Development Professor Mthuli Ncube this afternoon is indicative of a 0.4 % increase of the Gross Domestic Product (GDP) for the current financial year as compared to the 2021 National Budget growth forecast.

The growth is largely hinged on a successful rainy season and good performance in the mining industry.

Mr Speaker Sir, the domestic GDP growth for the year 2021 is projected to remain strong at 7.8%, slightly above the 2021 National Budget growth forecast of 7.4% . The strong rebound of the economy is anchored on a better 2020/21 rainfall season, higher international mineral commodity prices, stable macroeconomic environment and COVID-19 pandemic response measures, including the vaccination program,said Ncube.

Higher growth rates are projected in agriculture,electricity generation,accommodation and food services,as well as financial services.

The review statement also indicated that the fiscal and monetary consolidation measures being implemented by government to date have managed to firmly anchor inflation expectations as shown by a significant decline in inflation from 837.5% in July 2020 to 106.6% in June 2021.

Month on month inflation is also expected to remain stable.

Month-on-month inflation is expected to remain stable at less than 3% during the second half of 2021. Consequently, annual inflation is expected to decline further by end August 2021 and further to between 22% and 35% by December 2021,he added.

Ncube last year presented a $421 billion national budget statement, premised on the assumption that the cumulative revenue collections for the 12 months to December 2021 would total $390,8 billion.
He predicted a national budget balance of minus $30,8 billion while the current account was expected to close the current financial year at $73,8 billion.

The treasury chief projected that the economy would grow by 7,4 percent, after a straight two-year downturn, largely driven by agriculture and mining, while inflation was forecast to end the year at 9 percent.
The strong projected growth this year was also backed by the International Monetary Fund (IMF), which foresees a 6 percent expansion and the World Bank, which predicted a conservative 3,9 percent.

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