The outlook for the Zimbabwean economy

Working and discussion papers
September 2017
Godfrey Kanyenze, Prosper Chitambara and Judith Tyson

In the past decade, sub-Saharan Africa has undergone a renaissance, with broad-based economic growth including structural economic deepening and diversification and increasing political stability in many countries. An exception to this has been Zimbabwe. In the period from 1999 to 2008, Zimbabwe’s gross domestic product declined by 52%. This ended in 2008 in a period of hyperinflation and dollarisation of the economy. Subsequently, the economy experienced anaemic growth, which averaged 2.9% from 2009 to 2016.

However, the Zimbabwean economy did more than simply underperform in relation to economic growth on a comparative basis with the region. It underwent a significant structural degeneration, characterised by a number of factors, including:

  • an increased dependence on primary commodities;
  • de-industrialisation and informalisation of the economy;
  • negative saving and depressed investment levels;
  • weakening public institutions characterised by fiscal and debt mismanagement and corruption; and
  • infrastructure and public service degeneration.

This paper explores these various factors alongside the country's political economy, which has been the predominent driver of economic events. The paper then presents a set of reforms that could reverse Zimbabwe's economic decline, but concludes that such a programme of reforms would be impossible to propose and implement within the current political and social environment.