World Bank downgrades Zim to low-income country

Business Top Stories Zimbabwe

Ndaka Majaka

TWO months after rating Zimbabwe a lower – middle income country, the World Bank has downgraded the country to a low income country.

According to its latest report, the World Bank placed Zimbabwe in this classification made up of economies whose Gross National Income (GNI) is
US$910 per individual over a 12-month period.

Just last week, the International Monetary Fund (IMF) said it anticipated Zimbabwe’s economy to contract by 7,1 percent.

Head of Research at local equities firm, Morgan & Co, Batanai Matsika, said the projections and ratings were a reflection of a deteriorating macro-economic environment in Zimbabwe.

“Looking at institutions such as the Economic Intelligence unit, they are estimating a contraction of 18 percent. So really, this talks to the deterioration in the broader macro-economic environment,” Matsika said.

Zimbabwe is presently battling triple-digit inflation, a power crisis that has seen fuel prices surge weekly, while industry is plunged into 16-hour darkness and disposable incomes continue to shrink.

The country is also grappling with a foreign exchange shortage that has seen the local currency free-falling against the greenback.

In September 2019, the IMF said Zimbabwe had plunged into recession.

Meanwhile, the World Bank report said the Sub-Sahara Africa region is succumbing to tensions at the global landscape.

“The external environment is as challenging for Sub-Saharan Africa. Global
growth has continued to slow, amid rising policy uncertainty due to the renewed intensification of trade tensions in the global economy.“Partly as a result, the prices of most of Sub-Saharan Africa’s commodity exports have weakened since the second quarter of 2019. While global financial conditions have eased, capital inflows in the region have remained modest as trade policy uncertainty continues to weigh on investor sentiment,” the World Bank report said.