Zimbabwe's growth to remain flat, deflation to persist in 2016: World Bank

HARARE (Reuters) - Zimbabwe's economy will grow at 1.5 percent in 2016 and consumer prices would remain deflationary as global and local constraints limited a recovery, the World Bank said on Wednesday. The global lender said growth this year would be slower than the government's estimate of 2.7 percent, while inflation in the same year would average -1.7 percent. "We expect deflation to continue this year," World Bank senior economist for Zimbabwe Johannes Herderschee said during a presentation of the bank's outlook on Zimbabwe. The Southern African country is experiencing crippling power cuts, blamed for keeping away potential investors in an economy struggling to emerge from a steep recession between 1999-2008 that saw the economy contract by nearly half. "The fundamentals for recovery are still strong but the headwinds are increasing. These headwinds and the brunt of economic corrections, both domestic and global will likely be most deeply felt by the poor," the World Bank said in a report. Zimbabwe however expects gold output to rise by 28 percent in this year, while the government also plans to cut the royalty fee on bullion by 40 percent, among a host of government's efforts to boost growth. Finance Minister Patrick Chinamasa in December blamed deflation on weak consumer demand and an influx of cheaper goods from South Africa, the continent's biggest economy. (Reporting by MacDonald Dzirutwe; Writing by Mfuneko Toyana; Editing by James Macharia)