Political and economic situation

Between 2009 and 2012 Zimbabwe’s economy rebounded following the introduction of a multiple currency system, growing at an average of 11% per year. However, GDP growth slowed from 10.6% in 2012 to an estimated 3.1% in 2014. Planned investments in agriculture, mining, communications and other infrastructure projects, including in the water and energy sectors, are expected to bring about marginal improvements in the next few years.

The economic recovery in recent years has been underpinned by the mining and agriculture sectors, which accounted for 93.5% of export revenues between 2009 and 2013. Mining has weak links to the rest of the economy. It is also capital intensive and the opportunities for job creation are limited. The manufacturing sector saw a drop in activity between 2011 and 2014. On top of this, more than 80.0% of workers are employed in the informal sector.

Against the background of weak domestic demand, tight liquidity and the appreciation of the US dollar against the South African rand, inflation was slightly negative in 2014 and it is projected to remain low in 2015. Industrial capacity utilisation continues to decline and is estimated at 36.3% owing to underproduction and lack of competitiveness. The overvalued real exchange rate relative to the South African rand has caused a decline in the country’s external competitiveness, as it has made imports cheaper than domestically produced goods and exports more expensive.

For almost three decades the fortunes of Zimbabwe – a member of the Southern African Development Community (SADC) ­– have been tied to President Robert Mugabe, a pro-independence campaigner who became the country’s first black leader. Until 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 achievement of a two-thirds majority in parliamentary elections, the power-sharing coalition was shelved.

The official national currency is the US dollar (25 Sept. 2015: EUR 1 = USD 1.12).