Zimbabwe is experiencing a positive economic outlook as it recovers from the 2019/20 COVID-19 recession and the 2024 El Niño-related drought, according to the fifth Zimbabwe Economic Update (ZEU) released today. The report suggests that strengthening resilience to climate shocks could further boost economic growth.
The ZEU, titled “Improving Resilience to Weather Shocks and Climate Change,” attributes this positive outlook to an anticipated recovery in agriculture and strong growth in industry and services. Growth is expected to reach 6 percent in 2025, up from 2 percent in 2024, driven by a broad-based post-drought recovery. Agricultural production is forecasted to increase by nearly 13 percent, particularly in maize and tobacco sectors. Additionally, new investments are likely to enhance production in lithium mining and iron and steel manufacturing.
The mining sector continues its robust performance with rising gold prices, while tourism sees rapid growth due to increased international arrivals. However, the manufacturing sector has shown slow growth partly due to power shortages caused by declining water levels at Lake Kariba affecting hydroelectric power generation.
For sustained economic growth, Zimbabwe must address macroeconomic challenges, including ensuring price and exchange rate stability. Efforts are needed for arrears clearance and debt resolution through the Structured Dialogue Platform.
To maintain macro-economic stability, minimizing the impact of economic reforms on vulnerable households is crucial. It is essential for the government and development partners to support these households by strengthening the National Social Registry for better coordination of assistance.
The El Niño drought underscores Zimbabwe's urgent need for resilience against climate-related shocks, especially in agriculture—a key part of its economy. Eneida Fernandes, World Bank Country Manager, stated: “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 management are deemed critical for both citizens' well-being and economic stability.
The ZEU seeks to provide insights into economic developments to stimulate discussions on macro-economic issues facing Zimbabwe. The report highlights opportunities for increasing public investment in climate adaptation efforts.