The years between 2009 and 2012 were marked by an economic rebound following the introduction of a multiple currency system, with GDP increasing at an average of 6% per annum over the past five years. GDP growth decelerated from 10.6% in 2012 to an estimated 1.5% in 2015. Investments in agriculture, mining, communications and other infrastructure projects, including in the water and energy sectors, are expected in the coming years.
The country’s recent economic recovery has been underpinned by the mining and agriculture sectors, which accounted for 93.5% of export revenues between 2009 and 2013. Mining has weak linkages to the rest of the economy however generates over 60% of the country’s export earnings. It is also capital intensive with limited employment creation opportunities. The manufacturing sector saw decreased activity between 2011 and 2014. On top of this, more than 80.0% of workers are employed in the informal sector.
Against a background of weak domestic demand, tight liquidity conditions and the appreciation of the US dollar against the South African rand, inflation is estimated at 1.6% in 2016. According to a Conference of Zimbabwe Industries (CZI) survey, industrial capacity utilization increased by 18% to 47.4% in 2016, although there are concerns of poor data quality and non-operational or under-utilized companies. In January 2015, to boost trade and attract foreign investment, the Reserve Bank of Zimbabwe (RBZ) announced that the Chinese renminbi, Indian rupee, Australian dollar, and Japanese yen would be accepted as legal tender in Zimbabwe – in addition to the use of the South African rand, Botswana pula, and US dollar. Later that year, in June 2015, the Central Bank formally phased out the Zimbabwe Dollar, formalizing the multi-currency system to counteract hyper-inflation. Suffering from a lack of liquidity, the Government of Zimbabwe introduced $2- and $1-denominated bond notes that were theoretically equivalent to 2 and 1 USD respectively, in November 2016. With a lack of public trust in the parallel currency, the notes were quickly (i.e. within one week) trading at USD 0.70 on the black market. In February 2017, a $5-denominated bond note was introduced, bringing the total amount of bond notes in circulation to USD 88 million.
The fortunes of Zimbabwe have for almost three decades been tied to President Robert Mugabe, the pro-independence campaigner who became the country’s first black leader. Until the parliamentary elections in 2008, Zimbabwe was effectively a one-party state, ruled by Mr. Mugabe’s Zanu-PF. A power-sharing deal agreed after the polls raised hopes that power might be distributed. However, following Mr. Mugabe’s re-election as president in 2013 and Zanu-PF’s gaining of a two-thirds majority in the parliamentary poll, the power-sharing coalition was forgotten. In February 2017, Mr. Mugabe reaffirmed his intention to run for office in 2018, at the age of 94.
Official national currency is the US-Dollar (1 Euro = 1.05 USD; Feb 25th 2017).
