major macro economic indicators
|2020||2021||2022||2023 (e)||2024 (f)|
|GDP growth (%)||-5.2||7.2||3.0||3.0||3.0|
|Inflation (yearly average, %)||557.0||98.0||104.0||32.0*||30.0*|
|Budget balance (% GDP)||0.8||-1.7||-1.5||-2.5||-2.5|
|Current account balance (% GDP)||2.9||1.5||1.0||0.5||1.0|
|Public debt (% GDP)||102.5||66.9||92.6||102.0||100.0|
(e): Estimate (f): Forecast *the figures reflect a change in the Reserve Bank of Zimbabwe's method of calculation, which takes account of the partial dollarisation of the economy
- Abundant mineral resources (platinum, gold, diamonds, copper, nickel, rare earths)
- Agricultural wealth (maize, tobacco, cotton)
- Tourism development potential
- Economy devastated by hyperinflation and the depreciation of the local currency, caused by the monetisation of the deficit
- Rain-fed agriculture exposed to the vagaries of the weather, lack of inputs and poor planning, and suffering from low productivity
- Precarious food and health situations, dependence on humanitarian aid
- Cash and currency shortages exacerbated by corruption and smuggling at borders
- Dependence on volatile raw materials prices, some of which are smuggled out of the country
- Under-investment in infrastructure (particularly energy and transport)
Growth underpinned by the mining sector
After a year of drought, floods and hyperinflation in 2022, Zimbabwe's economic growth should just about hold steady in 2023 and 2024. Activity will be underpinned by exports thanks to the high prices of gold and nickel, which together account for 47% of the country's export revenues, which in turn correspond to 25% of GDP. The exploitation of new platinum veins in the Karo mine, planned for 2024, and the construction by 2025 of a battery metal recycling facility, financed by Chinese investment to the tune of $2.8 billion, will bolster mineral exports. In addition, growth could benefit from the dynamism of lithium production, driven by foreign demand. At the end of 2022, Zimbabwe decided to control exports of this mineral in its raw form, with the aim of encouraging foreign manufacturers to invest in processing it into local concentrates. The aim is to increase mining revenues, which currently account for just over 4% of GDP. In addition, the recovery of the agricultural sector (around 9% of GDP and 62% of jobs) will contribute to growth in 2023 and 2024, following a 14% contraction in production in 2022 as a result of poor weather conditions. Nevertheless, the durably high price of fertilisers and expected climatic disorders caused by the El Niño phenomenon are likely to weigh on the yields of the country's main crops. The outlook for growth is also clouded by power cuts, which are progressing very slowly, despite the commissioning of two new 600 MW units at the Hwange thermal power station in early 2023. In addition, business forecasts are subject to changes in the inflationary situation. After a period of hyperinflation brought about by the inflationary consequences of the war in Ukraine and the accelerated depreciation of the currency, inflationary pressures are easing very gradually thanks to the tightening of monetary and fiscal policies. The issue of gold coins, coupled with the sharp rise in its key interest rate by the Central Bank of Zimbabwe, have helped reduce inflation but have not managed to containing it. The effectiveness of Zimbabwe’s monetary policy has been eroded by high dollarisation and monetisation of the public deficit, while the lack of foreign currency is contributing to currency depreciation. Inflation is therefore likely to continue to weigh on household consumption as weaker purchasing power is not being offset by wage increases.
Difficult access to international financing
Zimbabwe's fiscal position improved slightly in 2022 as higher public spending to curb the impact of inflation was more than counterbalanced by increased revenue, given that some taxes were collected in US dollars. Nevertheless, the deficit is expected to widen in 2023 and 2024, reflecting increased social spending in the run-up to the August 2023 elections. Public sector remuneration (42% of government expenditure) will also contribute to the widening of the deficit as the government revised upwards the remuneration of civil servants, members of parliament and pensioners from April 2023. The public deficit will remain low, however, because of the difficulty of financing it other than by recourse to local banks and Afreximbank.
The current account surplus will also continue to be supported by remittances from expatriates in South Africa and the UK, as well as transfers to local aid agencies. However, imports of services related in particular to mining, as well as the repatriation of dividends from the latter, will continue to drag on the surplus. The trade deficit will remain moderate, but will increase, with imports growing faster than exports. Zimbabwe's external position will remain fragile, however, due to limited capital inflows and clandestine outflows. FDI, which is already low, mainly in the mining sector, will continue to fall in 2023 and 2024. In addition, foreign exchange reserves will remain very low (0.9 months of import cover in 2022), even though the country has already used 60% of the additional special drawing rights allocated by the IMF in August 2021. Public debt will continue to rise as no agreement has been reached with creditors – even multilateral creditors – on potential restructuring. The government hopes to resume negotiations with Western creditors once the dispute over the presidential elections results has subsided.
President Emmerson Mnangagwa came to power following the "military-assisted transition" in November 2017 that forced Robert Mugabe to resign after more than 30 years in power. He was re-elected for a second term in the controversial elections of 23 and 24 August 2023 where he won 52.6% of the vote, compared with 44% for his main opponent, Nelson Chamisa. Chamisa, head of the Coalition of Citizens for Change (CCC), denounced fraud allegedly organised by the ruling Zanu-PF party and called for a new election. Observers from the European Union, the Southern African Union and Commonwealth countries questioned the transparency of the vote, which was otherwise calm. The electoral campaign was nonetheless marked by a crackdown on the opposition, including the banning of some rallies. Disputed results aside, the presidential party gained a majority of votes in Parliament after winning 136 seats out of 210. However, the post-election unrest threatens to disrupt the country's strategy of international re-engagement, as well as the negotiations surrounding the restructuring of its debt, in a context where almost half the population is considered poor.
Last updated: November 2023