Zimbabwe: Economic and Political Overview
Despite currency instability and high inflation, economic activity in Zimbabwe demonstrates resilience. GDP growth was projected at 5.3% in 2023, driven by expansion in agriculture and mining, as well as foreign currency inflows and remittances supporting domestic trade and services. However, growth is anticipated to slow to around 3.25% in 2024, partly due to the effects of drought on agriculture production and decreased commodity prices. These factors are anticipated to impact foreign currency inflows, but remittances should remain robust, and the current account is forecasted to have a small surplus (IMF).
In 2023, local-currency (ZWL) instability escalated: the official exchange rate depreciated by roughly 95%, while the disparity with the parallel market rate remained substantial, exceeding 30%. The 2023 National Budget revealed an overall deficit of ZWL 336.8 billion, equivalent to 1.5% of the gross domestic product, with financing needs totaling ZWL 575.5 billion, covering loan amortization and Government securities at ZWL 248.6 billion. In response to the economy's inflationary pressures, peaking between May and June 2023, adjustments were made to the macroeconomic fiscal framework, resulting in a nominal widening of the budget deficit to ZWL 3.6 trillion and a revision of the borrowing strategy. From January to September 2023, the Government successfully raised ZWL 305.9 billion through the issuance of Treasury bills, surpassing the revised borrowing target of approximately ZWL 276.3 billion (official governmental figures). The Ministry of Finance anticipates that Zimbabwe's budget deficit will conclude the 2024 year at 1.2% of GDP. Concerning public debt, the Public Debt Management Office (PDMO) disclosed that the total public and publicly guaranteed (PPG) debt increased marginally by 0.6% annually, reaching USD 17.7 billion as of the end of September 2023, up from USD 17.6 billion in September 2022. Of the total PPG debt stock in September 2023, 72% (USD 12.7 billion) was acquired externally, while 28% (USD 5 billion) was obtained from the domestic market. The external PPG debt consists of bilateral debt (USD 6 billion), multilateral debt (USD 3.1 billion), and debt from the Reserve Bank of Zimbabwe (RBZ) (USD 3.6 billion). The IMF estimated the debt-to-GDP ratio at 95.4% in 2023. Since June 2023, the Government has taken proactive measures to combat high inflation by tightening monetary policy in efforts to reduce both inflation and the parallel market premium. Additionally, it has extended the utilization of US dollars as legal tender until 2030. The increase in inflation occurs amidst the backdrop of the local currency's depreciation against the U.S. dollar, exacerbated by the ongoing scarcity of foreign currency within the country. This currency volatility has led to escalating prices, as businesses strive to cope with the mounting inflationary pressures.
Unemployment rate estimates stood at 21% in 2023, according to ZimStat, the country's national statistics agency. However, that rate doesn't reflect the income losses from reduced working hours, unpaid leave, and the decrease of opportunities for formal and informal sector activities which was exacerbated by the pandemic, and drove thousands of the poorest people in the country into unemployment, leaving millions Zimbabweans on the brink of starvation. Additionally, the informal economy is widespread and only 5% of workers have formal jobs. According to the World Bank, more than 38.3% of the population still lives below the poverty line and the extreme poverty rate rose in recent years. The country was estimated to have a GDP per capita (PPP) at USD 2,607 in 2022, among the lowest in the world (World Bank).
| Main Indicators | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
| GDP (billions USD) | 31.49 | 32.42 | 47.08 | 49.73 | 50.48 |
| GDP (Constant Prices, Annual % Change) | 6.2 | 4.1 | 3.6 | 3.5 | 3.3 |
| GDP per Capita (USD) | 1,991 | 2,006 | 2,857 | 2,962 | 2,953 |
| General Government Gross Debt (in % of GDP) | 98.4 | 95.4 | 56.9 | 52.2 | 48.2 |
| Inflation Rate (%) | n/a | 314.5 | 222.4 | 128.1 | 72.3 |
| Current Account (billions USD) | 0.32 | 0.28 | -0.32 | -0.41 | -0.47 |
| Current Account (in % of GDP) | 1.0 | 0.9 | -0.7 | -0.8 | -0.9 |
Source: IMF – World Economic Outlook Database, October 2021
Zimbabwe has abundant natural resources, including diamonds, gold, coal, iron ore, nickel, copper, lithium, tin, and platinum. Diamond, gold, and platinum have been the most economically significant natural resources produced in Zimbabwe. Even though the country is rich in resources, only around 10.3% of the land is arable. Agriculture represents 7.2% of GDP and employs 53% of the population (World Bank). The agricultural sector is dominated by tobacco production, which is the country’s second source of foreign currency. Other agricultural exports include maize, cotton, wheat, coffee, sugarcane, peanuts, sheep, goats, and pigs. Zimbabwe's economy depends heavily on its mining and agriculture sectors. Agriculture remains vulnerable to climate shocks in the country: according to the Finance Minister, Zimbabwe is expected to see a 50% reduction in its staple maize harvest in 2024, dropping to 1.1 million tons due to an El Niño-induced drought. This contrasts with the country's annual requirement of 1.8 million tons of maize for human consumption and the previously projected maize harvest of 2.3 million tons in 2023.
The mining industry dominates the industrial sector. Other industrial products include steel, wood, chemicals, cement, fertilizer, clothing, footwear, foodstuffs, and beverages. Industry represents 40.4% of the GDP and employs 14% of the workforce. The overall slow growth of the mining and manufacturing sectors reflects a difficult business environment, characterized by high inflation, tight financing conditions, and continuation of forex retention policies, which increase the costs of doing business and prevent the mining sector from capitalizing on higher global prices for minerals. In late 2023, the government introduced the Zimbabwe National Industrial Development Policy (ZNIDP) (2024-2030), replacing the National Industrial Development Policy that expired in 2023.
Services, which represent 40.7% of the GDP, employ 34% of the workforce and are highly reliant on tourism, given that the country enjoys a number of tourist sites of global significance. Zimbabwe’s tourism receipt increased 22% y-o-y in 2023, reaching USD 1.1 billion, showing signs of recovery from the pandemic-led crisis. The construction and financial sectors also play a role in the Zimbabwe economy. The country has a banking sector fashioned after the British model, with the Reserve Bank of Zimbabwe (RBZ) acting as the central bank. The sector comprises commercial banks, the largest subset, along with merchant banks, which facilitate trade financing and corporate transactions like mergers and acquisitions. Additionally, there are building societies offering real estate mortgages, the government-owned People’s Own Savings Bank, development financial institutions, and micro-finance entities. The financial landscape also includes insurance firms, pension funds, provident funds, investment trusts, and offshore portfolio investors.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 61.6 | 11.6 | 26.7 |
| Value Added (in % of GDP) | 8.8 | 28.8 | 56.6 |
| Value Added (Annual % Change) | 17.5 | 6.4 | 7.7 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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Latest Update: April 2024
