Zimbabwe’s recovery from decades of economic contraction has largely been shaped by agriculture growth and investment patterns. Zimbabwe had double-digit growth rates shortly after dollarization in 2009, but growth started to decline in 2012 as confidence started to diminish and the investment-to-gross domestic product (GDP) ratio declined sharply. Besides, higher growth in 2017 of 3.4% (partly due to recovery in agriculture production), up from 0.6 in 2016, the economic growth trend is now some 2% below the average for Sub-Saharan Africa. It is projected to slow to 2.7% in 2018 partly due to liquidity shortages. The overall trend is below population growth and thus negative in per capita income terms, contributing to higher poverty rates.
Zimbabwe’s expansionary fiscal policy that started in 2016 has resulted in unsustainable fiscal deficits that widened from 8.5% in 2016 to 11.1% in 2017. The expansionary fiscal policy spilled over into the financial sector and resulted in cash shortages that weigh negatively on economic growth. After experiencing record hyperinflation in 2008, the country adopted in 2009 a multicurrency regime that ushered in macroeconomic stability and positive economic growth. Inflation stabilized; revenues and bank deposits recovered sharply. Zimbabwe’s fundamentals for economic growth and poverty reduction remain
The political and economic crisis that characterized the economy between 2000 and 2008 nearly halved its GDP, the sharpest contraction of its kind in a peacetime economy. This raised poverty rates to more than 72
Social services have since recovered amid resurgent public and donor spending. Zimbabwe’s HDI ranking rose to 154 in 2016, and a Multi-Indicator Cluster Survey in 2014 revealed that in several key areas, Zimbabwe has regained its outcomes of the early 1990s. Underpinning this is a reduction in HIV prevalence to about 15% since 2014, down from more than 40 % in 1998. Life expectancy has recovered from 43.1 years in 2003 to 59 in 2015, compared with a high of 61.9 years in 1986; maternal mortality rate has declined from 960 deaths per 100,000 live births in 2010–2011, to an estimated 651 deaths in 2015; and under-five mortality has fallen from 94 per 1,000 in 2009 to 47 in 2015. Despite this, Zimbabwe missed a significant number of the Millennium Development Goals.
A lengthy isolation from the international community restricted aid flows and saw a build-up of arrears to multilateral and bilateral partners. However, the country has been making token payments on World Bank and other IFI arrears; and in 2015, a plan to clear arrears to facilitate access to
Zimbabwe has enormous potential given its generous endowment of natural resources, an existing stock of public infrastructure, and comparatively well skilled human resources. However, realizing this will require prompt action to correct fiscal policies, re-stabilize the monetary system, and resolve arrears to international lenders that would allow for a resumption of development financing. It will also require the renewal of capacity in the public
Last Updated: Apr 19, 2018