Zimbabwe’s economy is showing signs of robust growth and fiscal stability following the recent rebasing of its Gross Domestic Product (GDP) by ZIMSTAT, which now places the 2024 GDP at ZWL168.5 trillion, or approximately US$44.4 billion. This marks a significant leap from the earlier estimate of ZWL133.7 trillion (US$35.2 billion), underscoring the expansion of economic activity across multiple sectors and increased inclusion of previously unrecorded informal businesses. The new data reflects a positive trajectory towards achieving the country’s Vision 2030 target of becoming an upper-middle-income economy, with per capita income projected to exceed US$3 000 by 2025.
Key to this economic transformation is the government’s commitment to responsible fiscal management and improved debt sustainability. Zimbabwe’s debt-to-GDP ratio has notably dropped from over 60% to 46% as of end-2024, and is expected to further decline to 45% by year-end. This decline shifts the country’s primary economic challenge from debt sustainability to a liquidity issue. The government has reaffirmed its strategy of using a Staff Monitoring Program with the IMF to clear arrears with international financial institutions like the World Bank and the African Development Bank. This approach involves a carefully sequenced process, including the identification of a sponsor to provide bridge financing and ensure repayment through set-aside soft window funds, a process that, though brief in execution, requires prolonged technical groundwork.
On the trade front, Zimbabwe is engaged in strategic negotiations aimed at reducing US-imposed tariffs, currently at 18% on exports, while seeking mutual market access under a proposed no-tariff negotiation period. This move is aimed at enhancing the competitiveness of Zimbabwean products in the US market and fostering reciprocal trade relations.
While fiscal revenues remain at ZWL817.9 billion, the government is exploring ways to capture more from the expanded GDP base. Currently, Zimbabwe’s revenue-to-GDP ratio sits at 14.3%, down from 17%. The Treasury views the US$12 billion increase in GDP as an untapped reservoir for future revenue, with approximately US$1.5 billion in potential tax income. Simultaneously, fiscal deficit projections have been revised from 0.4% to 0.1% of GDP, essentially a balanced budget, thanks to the enlarged GDP denominator.
Notably, inflationary fears are being allayed through tight monetary controls and disciplined fiscal policies. There is currently zero borrowing from the Reserve Bank and no monetization of the deficit through domestic debt issuance. The Reserve Bank’s clampdown on liquidity has helped stabilise the recently introduced Zimbabwe Gold (ZiG) structured currency. Authorities project a sharp decline in year-on-year inflation come October, due to a favorable base effect and continued containment of monthly inflation.
The government is also focusing on enhancing shock-resilience. Drawing lessons from the 2019 drought, Zimbabwe has diversified its grain sources and maintained food security even under climatic stress. The increased adaptability is bolstered by smarter policies, such as open borders for grain and the promotion of alternatives like, wheat-based sadza, and has positioned the economy to better withstand shocks in future.
Looking ahead, further digitalisation of the economy is expected to formalise informal sector operations and improve economic measurement and taxation. This push aims to close data gaps, capture untapped economic activity, and broaden the tax base, ultimately aligning with national development objectives.
As Zimbabwe continues its economic ascent, the revised GDP figures not only symbolise growth but also unlock fiscal space, create opportunities for re-engagement with global financial institutions, and chart a clearer path toward Vision 2030. The challenge ahead lies in translating this growth into inclusive development that delivers tangible benefits for all Zimbabweans.
