Economic Outline

Economic Indicators

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).

Any Comment About This Content? Report It to Us.