HARARE (Zimbabwe Investor) - The Zimbabwean economy is set to continue on its recovery path of 2009 across all sectors, Kingdom Stockbrokers have said in their 2010 first quarter economic outlook report predicting an improved 7% growth in the Gross Domestic Product from the 4.7% achieved in 2009.

With industrial capacity expected to reach 60% by end of 2010, Kingdom have predicted that the manufacturing sector will grow by 10% saying, “the manufacturing sector stands to benefit from a continued existence of the existing current stability in the macroeconomic environment”.

Tourism is expected to grow by 10% in 2010 having registered a 6.5% growth in 2009. In a recessionary period where global tourist arrivals declined by 6% in 2009, Zimbabwe’s arrivals increased on the back of positive political development through the formation of the Inclusive Government. This positive development led to the traditional sources of tourist arrivals such as USA, Sweden and Germany among others lifting travels warnings on Zimbabwe.

An expected upsurge in the production of gold and platinum is projected to result in the mining sector achieving a 40% growth having managed a 9% growth in 2009 but Kingdom saw a moderate growth in the rest of the minerals during the same period.

The rainfall pattern in the country is pointing to a poor agricultural season potential undoing the positive gains of 2009 when the sector grew by 10%. With agriculture accounting for over 60% of all manufacturing inputs, a poor agricultural season will have a ripple effect on the rest of the economy. Kingdom now predict that due to the poor rainfall, the sector may actually register a growth of only 2% as opposed to a repeat 10% growth as predicted in the National Budget.

The Zimbabwe Stock Exchange is likely going to benefit from the drastic reduction in transaction costs announced by Finance Minister Tendai Biti in his 2010 National Budget. The reduction is likely going to influence the return of the foreign investor onto the market.

“Foreign investment could have been more had it not been for the high transactions that rendered the market illiquid”, Kingdom Stockbrokers said in the report adding, “at 7.5%, the costs were too high compared to those prevailing in the region of especially South Africa of around 3.5%.”

A lot of Zimbabwe’s economic prospects in 2010 however hinge on the sustainability of the current political arrangement. Economic players will be watching closely and studying the events and deliberations at Munhumutapa Government Buildings.