Zimbabwe

Gold and agriculture support growth despite distrust and lack of private investment

Economic growth rebounded significantly in 2025, driven by a more successful agricultural harvest following the 2024 drought associated with El Niño, as well as by high gold prices (34% of exports in 2024). An increase in expatriate remittances and a sharp slowdown in inflation — supported by exchange rate stabilisation and a restrictive monetary policy — also boosted private consumption.

In 2026, this momentum is expected to weaken somewhat, reflecting shaky confidence on the path back to macroeconomic stability, continued accumulation of domestic arrears and the persistent financial needs of the public sector, which are damping private investment. Unsustainable debt and the withdrawal of USAID in January 2025 will curb external financing. These factors, combined with ongoing electricity shortages, will limit Zimbabwe’s growth potential, keeping the economy well below the ambitious annual growth target of 7-12% set by the authorities to achieve upper-middle-income status under its “Vision 2030” strategy.

Growth will nevertheless continue to be supported by the mining sector, driven by favorable gold prices and strong performances in iron, steel, coal and chrome, as well as by the recovery of lithium and platinum production. Agriculture will also maintain its rebound, backed by the “Agriculture, Food Systems and Rural Transformation Strategy II” policy that aims to raise agricultural output to USD 15.8 billion by 2030, with an intermediate milestone target of USD 11.5 billion in 2026 (up from USD 10.3 billion in 2025) through investments in irrigation, mechanisation and inputs. At the same time, public investment will focus on more than 20 major infrastructure projects in 2026, particularly in the road sector. The continued slowdown in inflation, supported by the maintenance of a restrictive monetary policy (the policy rate has been held at 35% since September 2024), falling energy and food prices, plus remittances, will keep boosting private consumption. The central bank may consider cutting rates from mid-2026 as inflation eases. However, the effectiveness of monetary policy will remain limited by low confidence in the local currency (the ZiG, introduced in April 2024) and the economy’s high dollarisation.

Budgetary pressures persist, while foreign exchange reserves remain fragile

The budget deficit is expected to widen slightly in 2025 despite higher revenues, driven by an expanded tax base (inclusion of SMEs), reduced VAT exemptions, and the introduction of new taxes. Expenditures will also rise on back of a high wage bill that represents around 56% of total spending and elevated debt servicing fees. In 2026, the deficit could narrow slightly thanks to increased revenues, supported by a modest VAT hike from 15% to 15.5%. Due to strong opposition from miners, the government scrapped its initial proposal to introduce a 10% mining royalty payment on gold producers when the price per ounce reaches or exceeds USD 2,501. Instead, it implemented a progressive royalty framework, with a 10% rate applied only if the price exceed USD 5000/oz. Spending will mainly focus on education, health, social assistance (31.2% of total spending) and infrastructure. Despite a relatively small fiscal deficit, budgetary pressures will remain strong: payment arrears are significant (51% of debt or 26% of GDP in 2024), high inflation will continue to weigh on expenditure and development aid is expected to reach only USD 350 million in 2026, compared to a target of USD 500 million in 2025. In the absence of alternatives, financing will rely primarily on borrowing from local banks and a few foreign partners (bilateral or commercial banks, most of which are Chinese), which keeps the risk of monetising the fiscal deficit alive despite official commitments to avoid it. Nevertheless, the debt ratio should decline in 2025 and 2026 thanks to exchange rate stabilisation and strong GDP growth. That said, the IMF continues to assess the country’s public debt as unsustainable.

On the external front, the current account is expected to remain in surplus in 2025, supported by rising gold prices, buoyant tourism, tobacco exports and strong remittance inflows. This trend should continue into 2026. However, infrastructure projects will increase imports of capital goods and services, while limited access to international financing and the withdrawal of USAID will weigh on secondary income. Foreign exchange reserves, which are vulnerable to negative commodity price shocks and weak aid flows, are expected to cover less than one month of imports. To address this, the government raised the export retention threshold in January 2025: Zimbabwean exporters must now surrender 30% (up from 25%) of their earnings in exchange for local currency. However, the impact of this measure will be limited: some companies are refocusing on the domestic market to bypass the requirement, while artisanal and small-scale gold mining (40% of production) is exempt, excluding the revenue derived from smuggling.

Divisions within the ruling party amid international isolation

Marshalled to power in November 2017 after a “military-assisted transition” that forced Robert Mugabe to resign after more than 30 years as the country’s head of state, President Emmerson Mnangagwa was re-elected for a second term in 2023. In early 2024, the ruling party (ZANU-PF), which had held power since the country gained independence in 1980, won the parliamentary by-elections against the opposition party Citizens Coalition for Change led by Nelson Chamisa, thereby consolidating its absolute parliamentary majority.

Political instability is expected to persist in 2026 amid pronounced popular discontent with the ruling party and a challenging economic situation in the face of high informality, persistent poverty, foreign currency shortages and power cuts. The government’s ability to support the economy and create jobs continues to be thwarted by restricted access to international financing. Protests against the government are regularly organised by opposition groups and civilians, but these are systematically repressed. Adding to these challenges are divisions within ZANU-PF that are illustrated by tensions between Emmerson Mnangagwa and his Vice President, Constantino Chiwenga. Initially seen as Mnangagwa’s successor, Chiwenga has since been sidelined. Mnangagwa now seeks to run for another term until 2030 (by which time he will be 88) by postponing the elections scheduled for 2028 and scrapping the constitutional two-term limit. His influence within the party and his “super majority” could allow him to amend the Constitution. Although the risk of a military coup exists, Mnangagwa wields significant control by promoting loyal allies to key positions and by regularly reshuffling ministers and senior security officials, which prevents the emergence of rival power bases.

On the international stage, Zimbabwe remains fairly isolated. Relations with the West are tense. Although the EU has lifted the asset freeze on the state-owned Zimbabwe Defence Industries (ZDI), the embargo on arms and equipment that could be used for repression purposes remain in place, reflecting ongoing concerns about human rights violations in the country. Despite this context, several European companies are showing growing interest in Zimbabwe’s economy, as evidenced by the first EU-Zimbabwe Business Forum held in May 2025. The US, for its part, is maintaining sanctions against several senior officials, including President Mnangagwa. Given the country’s payment arrears, access to international financing is restricted. In this context, China continues to be the key economic and financial partner, providing almost all foreign investment — particularly in the mining sector — and accounts for a significant share of Zimbabwe’s trade as its second-largest supplier and third-largest customer. Russia provides support in the form of fertiliser and grain donations. South Africa is a host to many Zimbabwean migrants and remains a major trading partner, being its neighbour’s top supplier and second-largest customer.

Last updated: November 2025