The World Bank has further lowered Zimbabwe's projected economic growth rate for 2014 from 3 percent to 2.0 percent and predicts the growth to virtually stall by 2016, according to its latest global economic prospects report.
It says Zimbabwe's growth to further decelerate to one percent in 2015 and to 0.6 percent in 2016.
In April this year, the World Bank?downgraded Zimbabwe's economic growth projection for 2014 from an initial 4.2 percent to three percent citing low foreign direct investment, weak growth in the mining sector and adverse effects from the global economy.
It also said the global environment would affect the Zimbabwean economy through a stronger U.S. dollar, lower global demand for key exports, weaker commodity prices and reduced capital inflows to developing countries.
The Zimbabwean government, on the other hand, projected the economy to growth by 6.1 percent?in 2014 after a lacklustre growth of 3.4 percent in 2013.
But a biting liquidity crunch that has forced a number of companies to either downsize or close shop and an acute shortage of lines of credit is most likely set to dampen the envisaged 6 percent growth rate.
The Reserve Bank of Zimbabwe, or the central bank, last month cut the growth projection to 3.1 percent this year, and warned economic growth may slid into the negative territory in a year or two.
The WB said Zimbabwe's outlook remains clouded by downside risks emanating from lower international prices of minerals, vulnerabilities in the banking sector, policy?inconsistencies affecting investment, deflationary pressures, fiscal slippages and the unbalanced external position.
Zimbabwe is grappling with a widening trade deficit hovering at around 3 billion U.S. dollars annually.