Economical overview
The mining sector and agriculture form the
basis of Zimbabwe's economy. After a decade of decline
as the economy shrank by more than 40 percent and the
state approached a collapse, a reversal came in 2009. In
a few years, the economy grew by over 10 percent a year,
but from 2013, growth has slowed again.
Hundreds of thousands of Zimbabweans depend on food
aid or risk being hungry in the event of a poor corn
harvest. The country has problems with a low level of
investment, lagging infrastructure, widespread
corruption, high foreign debt and continued political
uncertainty.
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Countryaah.com:
Major imports by Zimbabwe, covering a full list of top products imported by the country and trade value for each product category.
Basically, Zimbabwe has a broad economic base,
compared to all neighboring countries except South
Africa, and at independence in 1980, the conditions for
economic development were good. The country was richly
equipped with gold and other natural resources. The
infrastructure, agriculture and manufacturing industries
were well developed. Despite the government's socialist
ideology, a pragmatic economic policy was pursued with
few nationalizations and a cautious land reform. Large
investments were made in education, health care and
other community services.
But after a few years, the problems began to
accumulate. Drought caused bad harvests, while export
prices fell and the political situation was troubled by
the uprising in Matabeleland (see Modern History).
Exports decreased and inflation rose. Corruption and
abuse of power spread within the state administration.
Large social initiatives, widespread benefits to
ministers and high defense spending forced the
government to take out large loans abroad.
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Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including ZI which represents the country of Zimbabwe.
The economy is shrinking
The debt combined with large budget deficits laid the
foundation for a deep economic crisis. President Mugabe
was forced to turn to the International Monetary Fund (IMF)
and the World Bank for financial support in 1990. In
return, austerity and deregulation of the economy were
implemented. The cost of Zimbabwe's involvement in the
war in the Congo-Kinshasa 1998–2002 (see Modern History)
caused the crisis to worsen dramatically. In 1999, the
Zimbabwean economy began to shrink and the country fell
into a downward spiral. The World Bank and the IMF
withheld their assistance, as the government did not
manage the repayments on the loans. The state-sponsored
violence against the opposition also caused Zimbabwe to
lose bilateral aid (see Foreign Policy and Defense).
Criticism against Mugabe increased, which contributed
to his decision to push for land reform (see Modern
History and Agriculture and Fisheries). The violent
phase of 2000–2002 became a fundamental shot against the
economy: food production collapsed as well as income
from food exports. After the land reform, large parts of
the formerly important commercial agriculture lay in the
trough and hundreds of thousands of farm workers went
unemployed. Other economic sectors, such as industry and
mining, were seriously disturbed by the political
turmoil and produced well below their capacity. Several
millions of people depended on food aid to avoid famine.
Extensive corruption in the public administration helped
to erode the economy.
Hyperinflation
In order to be able to pay central government
expenditure, the central bank began to print more money.
Prices continued to rise. In 2007, inflation was out of
control and was several thousand percent. There was
widespread lack of food and fuels. Much of the official
economic activity had ceased and unemployment was
estimated at upwards of 95 percent. Several millions of
Zimbabweans had fled the country. During 2008,
hyperinflation became galloping. Zeros were cleared from
the currency several times. In the end, the price
increase rate was so high that prices doubled in about a
day. In July, inflation was at a palpable 231 million
percent year-on-year, and then the government stopped
reporting figures. The situation became even worse
during the autumn, with prices estimated to have risen
most by close to 80 billion per month.
At the same time, the country's political crisis had
culminated in the disputed election that led to the
agreement on the division of power in September (see
Modern History).
The unifying government took office in February 2009
and the same month the government decided to give up
attempts to defend the Zimbabwean dollar. It was allowed
to use other currencies, which in practice the
Zimbabweans have already done for a long time. At that
point, the salary of a teacher, doctor or government
employee was not enough to take the bus to work.
When, among other things, the US dollar was
officially allowed, prices immediately began to fall,
and hyperinflation stopped. The IMF opened to lend money
to Zimbabwe for the first time since 2000. Several
Western countries also pledged aid for reconstruction,
and China alone provided $ 950 million.
Investors hesitate
The situation stabilized significantly financially.
But the upturn was based on a very low level. The race
that Zimbabwe has undergone was unusual for a country
that is not at war or has suffered any other external
disaster. The large external debt accounted for a severe
downturn and, five years later, was still above 100 per
cent of gross domestic product (GDP).
Foreign investors remain hesitant to invest in
Zimbabwe. A law that meant that black Zimbabweans must
own at least 51 percent of companies with assets worth
at least half a million US dollars created long-term
uncertainty. It was unclear how the law would be applied
and it was scrapped in 2018 and 2019.
After the 2013 elections, some of the sanctions have
been removed and Zimbabwe has been given the go-ahead
for both the International Monetary Fund (IMF), for the
first time in ten years, and from the EU. Inflation has
remained below 5 percent since 2009 and there is no
risk of a new galloping price increase since the
Zimbabwean dollar was also formally abolished in 2015.
At the same time, the growth rate fell, after being
around 3 percent for a couple of years.
Corruption is a difficult problem. According to the
National Audit Office, the state lost about $ 2 billion
in 2012 due to corruption. In 2014, Zimbabwe ranked
156th out of 175 in the organization Transparancy
International's ranking of the world's countries on
corruption.
FACTS - FINANCE
GDP per person
US $ 2,147 (2018)
Total GDP
US $ 31,001 million (2018)
GDP growth
6.2 percent (2018)
Agriculture's share of GDP
12.1 percent (2018)
Manufacturing industry's share of GDP
8.2 percent (2018)
The service sector's share of GDP
45.7 percent (2018)
Inflation
161.8 percent (2019)
Government debt's share of GDP
37.1 percent (2018)
External debt
US $ 9,330 million (2017)
Currency
Zimbabwean dollar 1
Assistance per person
$ 44 (2017)
- other currencies are used
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