HARARE – Zimbabwe’s gross domestic product (GDP) has plunged to US$35 billion, marking a significant contraction attributed to a severe drought, rapid currency devaluation, and instability in global commodities markets.
This represents a stark 25% decline from April’s reported GDP of US$47 billion, highlighting the challenges facing the nation’s economy.
According to The Zimbabwe Independent, the economic downturn was disclosed during the presentation of the 2025 National Budget by Finance, Economic Development, and Investment Promotion Minister Mthuli Ncube. The budget outlined several austerity measures, including new taxes on fast food and other goods, in an effort to address the fiscal crisis.
President Emmerson Mnangagwa had previously announced a remarkable GDP growth to US$47 billion at Independence Day celebrations in April. However, the Zimbabwe Public Debt Management Office reported that the GDP had since plummeted by US$12 billion, wiping out much of the gains touted earlier in the year.
The GDP decline coincides with a 40% slump in Zimbabwe Gold (ZiG), a gold-backed digital currency launched in April, and growing scepticism over government policies. The currency’s value has eroded significantly due to devaluation, falling from an exchange rate of US$1:ZiG14 to nearly US$1:ZiG30, according to Trust Chikohora, former president of the Comesa Business Council.
“The exchange rate played a major role in the collapse of ZiG,” Chikohora told The Zimbabwe Independent.
“Additionally, the impact of the El Niño-induced drought has worsened the economic outlook, with GDP recovery heavily dependent on favourable agricultural conditions in 2025.”
Despite the downturn, Minister Ncube projected a GDP recovery to US$38.2 billion in 2025, driven by a 6.6% increase in private consumption and a 5.3% rise in public sector activity. However, economists remain unconvinced.
“This reflects unrealistic and overly ambitious budget targets,” said Chenayimoyo Mutambasere, an economist at the Centre for Economic Justice. “A 200% increase in maize imports and declining investments further limit future productivity improvements, creating a cyclical economic challenge.”
Stevenson Dhlamini, an economics lecturer at the National University of Science and Technology, pointed to the harsh drought and shocks in the platinum group minerals sector as key factors behind the GDP contraction.
“Our GDP has shrunk significantly due to climate change and adverse conditions in key economic sectors,” Dhlamini noted.
The rapid GDP decline evokes memories of Zimbabwe’s economic collapse during the decade to 2008 when the economy contracted by 50% amid hyperinflation and political instability.
Economists warn that the current trajectory threatens to derail recovery efforts outlined in the 2025 National Budget, with lingering questions about the effectiveness of proposed measures.
As Zimbabwe grapples with the fallout of these cascading economic setbacks, analysts stress the need for more robust, consistent policies to steer the nation back to growth and stability.
