Finance Minister Tendai Biti said on Wednesday: "We are revising downwards the GDP forecast from 9.4% to 5.6%," Biti told lawmakers in Parliament as he presented the mid-year budget.
He said the annual inflation target of 5% would be met.
"With regards to diamonds, unfortunately only $46-million has been received against a forecast of $600-million."
Biti also lamented leakages of gold and government spending on foreign travel.
"Another elephant in the living room is foreign travel," Biti said, adding that the government has spent $157-million on trips abroad since 2009.
He said the benefits of the foreign trips did not match their cost, which Biti said outstripped the budget allocations for essential ministries like health and education.
"This is an area where we have to take action."
The Southern African country's economy has stabilised over the last three years after a decade-long crisis which saw runaway inflation reaching an official peak of 231-million percent before the government stopped counting.
But Biti blamed inconsistent policies among parties in the power-sharing government, poor rains and indiscipline in the public sector among other factors for the economy's poor performance.
Last month Biti told Parliament that between January and May the government had added 10 000 workers to its payroll without receiving proper approval for the hires.
A power-sharing government formed in 2009 between long-time political rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai dumped the worthless local dollar in favour of the US dollar and other regional currencies.
Goods that were in short supply or unavailable returned to the shelves, but prices have continued to fluctuate according to the cost of importing.
Zimbabwe relies on imports mainly from South Africa after the economic meltdown forced factories to downsize, close or relocate to neighbouring countries. – AFP