HARARE, January 31, 2024 — Zimbabwe’s economic outlook is positive, with recovery from the 2019/20 COVID-19 recession and the 2024 El Niño-related drought, according to the fifth Zimbabwe Economic Update (ZEU) launched today. The report highlights the opportunity to strengthen resilience to climate shocks and climate resilience, to further boost growth.
The ZEU titled “Improving Resilience to Weather Shocks and Climate Change” notes the positive outlook is due to an expected recovery in agriculture, and robust growth in industry and services. Growth is anticipated to increase to 6 percent in 2025 (up from 2 percent in 2024), due to a broad-based post-drought recovery. Agricultural production is expected to grow by almost 13 percent, driven by a strong recovery in maize and tobacco production. New investments are expected to increase production in lithium mining, as well as iron and steel manufacturing.
The mining sector continues to exhibit strong growth, bolstered by rising gold prices. Similarly, the tourism industry is growing rapidly, with increasing numbers of international arrivals and hotels’ bed occupancy. Yet manufacturing sector has seen lackluster growth, driven in part by power shortages that were also caused by the drought, as declining water levels in Lake Kariba affect Zimbabwe’s hydroelectric power generation.
To boost economic growth, Zimbabwe will need to continue tackling its macroeconomic challenges and efforts are also needed to ensure price and exchange rate stability, to support economic growth and job creation. Continued efforts are also key its engagement on arrears clearance and debt resolution through the Structured Dialogue Platform.
In restoring macro-economic stability, it will be essential to minimize the impact of economic reforms on vulnerable households. It will be critical for the government and development partners to identify ways to support vulnerable households, including by further strengthening and utilizing the new National Social Registry to coordinate and target assistance.
The impact of the El Niño drought highlights Zimbabwe's urgent need to bolster resilience against climate-related shocks, with a focus on the agriculture sector, a critical pillar of the economy. “Climate shocks such as the drought undermine sustainable development and exacerbate poverty levels, making it imperative to enhance the resilience of the agricultural sector. Enhancing irrigation development and investing in landscape and watershed management will be essential for the well-being of Zimbabweans and the stability of the economy,” said Eneida Fernandes, World Bank Country Manager.
The ZEU aims to provide insights into economic developments and outlook to stimulate discussions on macro-economic issues facing the country. This report highlights the opportunity to strengthen resilience to climate shocks by increasing public investment in climate adaptation efforts.
Contacts:
In Zimbabwe: Cheryl Khuphe, (263) 4-76333211, ckhuphe@worldbank.org
In Washington: Daniella Van Leggelo Padilla, dvanleggelo@worldbank.org
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