The Zimbabwe economy grew by 6.5% in 2022, down from 8.5% in 2021, but still higher than many Southern African Development Community (SADC) economies, according to the latest World Bank’s Zimbabwe Economic Review Update.
In a statement, the World Bank said, “Economic activity has accelerated in Zimbabwe, despite global challenges. Zimbabwe was one of the fastest growing economies in the Southern African Development Community (SADC) in 2021, 2022 and, so far, also in 2023.
“In 2023, economic growth is estimated at 4.5 percent. These growth dynamics were drivenby continued expansion in agricultural output due to abundant rains and resilience-building. The easing of COVID-19-related restrictions further supported economic activity, particularly in the tourism sector.”
The World Bank said elevated commodity prices in 2022 and 2023 supported a resurgence in mining sector output.
“Yet, shocks from the war in Ukraine, supply chain disruptions, economic volatility, and power shortages have kept Zimbabwe’s economic activity below its potential for both 2022 and 2023. The economic rebound since the pandemic has helped to bring down the levels of poverty and food insecurity.”
On the back of the economic recovery and record maize harvests in the 2020/21 agricultural season, the World Bank said, the extreme poverty rate fell by 6 percentage points to 43 percent in 2021 and then to 42 percent in 2022.
“The food insecurity rates also dropped from their highs of 2020 and early 2021. Nevertheless, poverty, vulnerability, and food insecurity rates remain high.”
The World Bank noted that fiscal adjustment needs to continue to durably reduce economic volatility.
“… Fiscal accounts benefited from higher-than-expected inflation and currency depreciation that helped to increase revenues in local currency, moderating the increase in the fiscal deficit.”
In the report, it also said rising public wages remain a challenge.
“Wages rose to 5.4 percent of GDP in 2021 and 6.1 percent of GDP in 2022, and continued increase in 2023 presents a risk of an unsustainable wage bill. Wages are paid partly in foreign currency (fixed amount per month) and local currency to maintain the real value of wages. Higher wages may undermine economic policy by crowding out capital and social spending.”
Despite the remarkable growth in 2022, the World Bank said, Zimbabwe remains in debt distress and while borrowing is limited, public debt has continued to increase that is driven by external arrears and legacy debt.