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Zimbabwe has strong foundations for accelerating future economic growth and improving living standards. The economy has excellent human capital, comparable to that of upper-middle-income economies in Sub-Saharan Africa, although some skill shortages are emerging in some sectors. Moreover, Zimbabwe possesses abundant mineral and natural resources that, if well managed, can support the country’s development objectives.

Zimbabwe’s economic development continues to be hampered by price and exchange rate instability, misallocation of productive resources, high informality, low investment, and limited structural transformation. Economic growth has been volatile over the past decade. High inflation, multiple exchange rates, and unsustainable debt levels have increased the cost of production, reduced incentives for productivity-enhancing investment, and encouraged informality. Trade integration has declined, and foreign direct investment (FDI) remains low, limiting the transfer of new technologies and investment in modernizing the economy.

High unsustainable debt and arrears to international financial institutions (IFIs) limit Zimbabwe’s growth potential. The government has prepared an Arrears Clearance, Debt Relief, and Restructuring Strategy, resumed token payments to IFIs and Paris Club creditors, and initiated a structured Dialogue Platform with creditors and development partners with the aim to agree on a program of economic, governance, and land reforms.

Real GDP growth is estimated to have slowed to 3.4% in 2022 from 8.5% in 2021 on the back of worsening agriculture conditions and macroeconomic instability. Due to low rainfall, agricultural output contracted by 14%, after growing at double digits in 2021. Triple-digit inflation constrained private sector demand, while fiscal austerity limited growth of government demand and investment. Mineral exporters benefited from high global prices and, together with tourism, contributed the most to overall economic growth.

Inflation returned to triple digits, albeit declining since August 2022, fueled by broad money expansion and a surge in global prices. The war in Ukraine, through high food and energy prices, has exacerbated domestic inflationary pressures that emanated from loose monetary policy and quasi-fiscal operations. Annual inflation returned to triple digits in May 2022 and reached 244% in December 2022. However, monetary tightening, including sharp hikes in interest rates, and fiscal policy measures brought inflation down to 230% in January 2023. Despite still high inflation, the Central Bank reduced the interest rate from 200% per annum to 150% in February 2023.

The fiscal deficit was contained to 1.5% of GDP in 2022, but quasi-fiscal operations continued.  Additional spending, mostly on public investment, procurement of grain, and social protection, was driven by inflation and was matched by higher revenue. Revenues increased, due to high inflation and exchange rate valuation gains, as some of the taxes were collected in U.S. dollars.

Key Developmental Challenges

Although extreme poverty has declined since its peak in 2020, it remains high in the context of cyclical agricultural production and elevated food prices. Persistent inflation, high dependence on low-productivity agriculture, slow structural transformation, and intermittent shocks like drought, natural disasters, and the COVID-19 pandemic have contributed to the high rate of poverty and vulnerability in Zimbabwe.

Last Updated: Mar 30, 2023

What's New


Zimbabwe: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments
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Additional Resources

Country Office Contacts

Main Office Contact
Block 3, Arundel Business Park
107 Norfolk Road, Mount Pleasant
Harare, Zimbabwe
(+263-4) 369-130/1
For general information and inquiries
Cheryl Khuphe
External Affairs Officer
(+263-4) 369-130/1
For project-related issues and complaints