Question 1 (100 marks) Read the article below and then answer the question that

Question

Question 1 (100 marks) Read the article below and then answer the question that follows: Zimbabwe Economic Update: The State in the Economy STORY HIGHLIGHTS Economic growth fell from 1.4% in 2015 to 0.7% in 2016, continuing the recent decline in per capita income growth. Growth should recover in 2017 because of good rains. Fiscal imbalances combined with a large volume of domestic borrowing in 2015/16 weakened the financial sector and are at the core of Zimbabwe's ongoing cash shortages. Conservatively estimated at roughly 50% of Zimbabwe's GDP, total public spending including expenditures by the central government, local authorities, and state-owned enterprises and parastatals is exceptional compared to other countries of similar income levels and size

Explanation / Answer

Economic growth fell from 1.4 percent in 2015 to 0.7 percent in 2016 continuing the recent decline in per capita income growth. Growth should recover in 2017 because of good rains.
Fiscal imbalances combined with a large volume of domestic borrowing in 2015/16 weakened the financial sector and are at the core of Zimbabwe’s ongoing cash shortages.
Conservatively estimated at roughly 50 percent of Zimbabwe’s GDP, total public spending—including expenditures by the central government, local authorities, and state-owned enterprises and parastatals—is exceptional compared to other countries of similar income levels and size.

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