Harare, Zimbabwe – This month, inflation in Zimbabwe peaked at 280 percent, one of the highest rates globally. The Zimbabwean dollar also weakened, trading at 930 to the US dollar on the parallel market – a steep decline after two months of relative stability at 700 to $1.
This led to plummeting living standards in the Southern African country where 7.9 million people, amounting to half of the population, fell into extreme poverty between 2011 to 2022.
Ahead of the crunch 2023 presidential elections, proposed currency reforms by the incumbent Emmerson Mnangagwa’s administration have already been put on hold.
Unsurprisingly economists, political scientists and multilateral institutions are sounding the alarm that the trend of declining economic fundamentals could continue till next year.
During a recent visit to the country, the International Monetary Fund (IMF) predicted a further fall in the gross domestic product (GDP) by 3.5 percent in the coming year due to among other things, “renewed domestic and external shocks (inflation surge, erratic rainfall, electricity shortages, and Russia’s war in Ukraine) … adversely affecting economic and social conditions.”
“These multiple shocks will continue to weigh on Zimbabwe’s growth prospects,” the IMF said in December.
Odds stacked against economy
Analysts say years of economic mismanagement under Zimbabwe’s first leader, Robert Mugabe and later under his predecessor Emmerson Mnangagwa, have stymied the economy, further exacerbated by hyperinflation and the currency devaluing rapidly.
For Gift Mugano, a visiting professor of economics at the University of Zimbabwe Business School, the country’s 2023 economic outlook is gloomy.
“The year 2023 will be very dire, driven by spill-over effects of difficulties we encountered in 2022,” he told Al Jazeera.
Due to increased government spending as the central bank prints more money for contractual obligations to government suppliers and to finance agriculture, the local currency is expected to continuously weaken against leading currencies this festive season and into the next year.
