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Zimbabwe economy on track to grow by 6% as it recovers from the drought

Mthuli Ncube, Zimbabwe's Finance Minister, said that the country is on course to achieve its 6% forecasted economic growth by 2025. This will be aided by a good agricultural production and high commodity prices.

In the first half of this year, the economy of Southern Africa has begun to show signs of recovery following a severe currency crisis and drought in 2024 which pushed the GDP growth down below 2%.

Ncube, in his mid-year review of the budget, told the parliament that "given the positive developments in the economy during the period from January to June we are confident the projected growth of 6% in the National Budget 2025 is achievable."

He said that "all sectors of the economy will record positive growth by 2025. This is mainly due to a favorable agriculture season, increased electricity generation, a stable exchange rate, and lowered inflation rates."

He didn't give any updates on the budget, which was projected to be 0.4% of the gross domestic product by 2025 in the budget forecast made last November.

Zimbabwe's fiscal situation remains under pressure due to grain imports and drought relief expenditures. The public sector wage bill is also a factor. Analysts say that while the government has collected more revenues than it did in the same time period last year they believe it will be difficult to contain the deficit without new fiscal measures.

The ZiG currency was launched in April 2024 as a replacement for the Zimbabwe dollar. It has been largely stable in relation to the U.S. Dollar, but it is still overshadowed due to the widespread use of dollars in daily transactions.

Ncube reaffirmed the government's commitment towards the gold-backed currency and said that the currency has benefited from strict monetary and fiscal policy. (Reporting and editing by Nellie Pettison; Chris Takudzwa Muronzi)

(source: Reuters)