Zimbabwe's economic landscape continues to deteriorate, with the country's GDP plummeting to US$35 billion as of November 2024, marking a significant 25% decline from US$47 billion reported in April 2024. This downturn represents a staggering loss of US$12 billion over the past seven months, as reported by the Zimbabwe Public Debt Management Office. The decline is attributed to severe drought conditions, rapid currency devaluation, and instability in global commodities, as highlighted by Finance Minister Mthuli Ncube during the presentation of the 2025 National Budget. The new currency, the Zimbabwe Gold (ZiG), has faced a significant depreciation of over 40% since its introduction on April 5, 2024, due to mismanagement and external factors. [08e8a7b9]
In April 2024, President Emmerson Mnangagwa had previously announced optimistic GDP growth during Independence Day celebrations, claiming a surge of 194% from US$16 billion in 2018 to US$47 billion. However, the current figures starkly contrast his projections, with Trust Chikohora, an economic analyst, noting that currency instability and the agricultural crisis have been major contributors to the economic slump. The ongoing El Niño-induced drought has further exacerbated the economic outlook, affecting agricultural production and food security. [08e8a7b9]
Despite the grim situation, Ncube projected a potential recovery of GDP to US$38.2 billion in 2025, driven by a 6.6% increase in household spending. However, many economists remain skeptical, with Chenayimoyo Mutambasere criticizing the budget targets as unrealistic. Stevenson Dhlamini pointed out that climate change and sector shocks have significantly impacted the economy, recalling the catastrophic economic collapse that Zimbabwe experienced in the 2000s. Analysts are calling for consistent and effective policies to facilitate recovery and restore investor confidence. [08e8a7b9]
Amid these challenges, Zimbabwe's inflation rate remains alarmingly high at 880% per year, with the RBZ's introduction of the ZiG currency failing to stabilize the economy. The government injected US$64 million in September 2024 to support the currency, but the measures have not produced the desired results. The RBZ's mismanagement has cost the economy over US$3 billion from 2020 to 2023, and the money supply continues to surge. [08e8a7b9]
In a recent development, RBZ Governor Dr. John Mushayavanhu assured that civil servant bonuses, set to be paid ahead of the festive season, will not disrupt price stability or the exchange rate. The bonuses will be distributed in US dollars and ZiG, with a larger portion in hard currency. The government has budgeted for these payments, expecting substantial revenue inflows in the fourth quarter. Recent monetary policy adjustments include raising the bank policy rate from 20% to 35% and increasing statutory reserve requirements to 30%. Zimbabwe's total reserves have grown to approximately US$540 million, significantly improving from US$285 million in April 2024. The RBZ's tight monetary policy stance aims to maintain price and currency stability. [08e8a7b9]