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Zimbabwe’s Economic Outlook: IMF Projects Modest Growth in 2024 with Strong Recovery in 2025

IMF staff team led by Mr. Wojciech Maliszewski
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HARARE – Zimbabwe’s economy is projected to grow by a modest 2% this year due to the severe drought, but the International Monetary Fund (IMF) expects a robust recovery to 6% in 2025, driven by a rebound in agriculture and capital projects in manufacturing.

In a statement following a mission visit that concluded yesterday, the IMF commended Zimbabwe for improvements in monetary policy discipline and recommended further refinements to its policy framework.

“Price stability would be best achieved by stabilizing the ZiG nominal exchange rate against a suitable basket of currencies. This could be accomplished by controlling base money growth: for now through unremunerated Non-Negotiable Certificates of Deposits (NNCDs), but over time through indirect (interest-rate-based) monetary instruments to increase the attractiveness of the new currency,” the IMF stated.

The IMF also emphasized the need for a deeper market to determine the exchange rate, which would provide relevant information for monetary policy decisions. This requires identifying and removing any remaining impediments to the functioning of the foreign exchange market to promote price discovery.

Zimbabwe introduced a new currency, the Zimbabwe Gold (ZiG), in April 2024, which has maintained stability against the US dollar. This was after the Zimbabwean dollar lost 260% of its value in the first three months of the year. The ZiG has been credited with ending a period of macroeconomic instability.

IMF Staff Completes 2024 Article IV Mission to Zimbabwe

June 27, 2024

End-of-mission press releases include statements from IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussions and decision.

An IMF staff team led by Mr. Wojciech Maliszewski conducted a mission to Harare during June 18-27, 2024, to conclude the 2024 Article IV Consultation.

At the conclusion of the IMF mission, Mr. Maliszewski issued the following statement:

“Despite headwinds, Zimbabwe’s economy continues to show resilience. Growth is expected to decelerate to about 2% in 2024 (from 5.3% in 2023), as the country faces a devastating El Niño-induced drought. Higher import bills are also worsening the balance-of-payments outlook. But growth is expected to recover strongly in 2025 to about 6%, supported by a rebound in agriculture and ongoing capital projects in manufacturing.

“Against this background, the Reserve Bank of Zimbabwe (RBZ) introduced in April 2024 a new currency—the Zimbabwe Gold (ZiG). The ZiG official exchange rate has so far remained stable, ending a bout of macroeconomic instability in the first three months of the year (when the Zimbabwean dollar depreciated by about 260%). Assuming that macro-stabilization is sustained, cumulative inflation in the remainder of the year is projected at about 7%.”

The IMF’s statement underscores both the challenges and opportunities facing Zimbabwe as it navigates a difficult economic landscape while laying the groundwork for future growth and stability.