Economy Uncensored with Tapiwanashe Mangwiro
As we bid farewell to “Economy Uncensored,” it is fitting to reflect on Zimbabwe’s economic trajectory and offer insights into what 2025 may hold. The nation’s economy stands at a crossroads, influenced by global commodity trends, domestic fiscal policies and monetary strategies.
This analysis delves into key factors shaping Zimbabwe’s economic outlook for 2025.
Gold prices and mining sector outlook
Gold has experienced a remarkable surge, with prices surpassing US$3 100 per ounce in early 2025, driven by global economic uncertainties and increased central bank demand. Goldman Sachs projects prices could reach US$3 300 by year-end, while Bank of America forecasts US$3 500 within two years.
For Zimbabwe, a significant gold producer, this uptrend presents both opportunities and challenges.
While higher gold prices could boost export revenues and foreign exchange reserves, the mining sector’s performance hinges on production capacity and operational efficiency. Persistent issues such as outdated infrastructure, erratic power supply, and regulatory uncertainties may impede the sector’s ability to capitalise fully on favourable market conditions.
Moreover, the volatility of gold prices necessitates cautious optimism, as any downturn could adversely affect projected earnings.
Zimbabwe’s mining sector has long been a cornerstone of the economy, contributing substantially to GDP and export revenues. In 2024, mining contributed approximately 12 percent of the nation’s GDP, with gold, platinum and diamonds as primary exports. However, beneficiation remains a critical challenge.
As of 2025, the government’s push for local beneficiation of platinum is still met with mixed results. Investors are wary of committing to refinery projects without clear and consistent policy frameworks. If Zimbabwe is to harness the full potential of its mining sector, policies must strike a balance between value addition incentives and investor confidence.
Inflation and disposable incomes
Inflation remains a critical concern. In November 2024, monthly consumer inflation eased to 11,7 percent, down from 37,2 percent in October, largely due to the strengthening of the ZiG currency. Zimbabwe’s ZiG month-on-month inflation rate plunged to -0,1 percent in March 2025, down from 0,5 percent in February, shedding 0,6 percentage points and marking a rare deflationary shift.
This decline was propelled by a steep -0,5 percent month-on-month rate in the Food and Non-Alcoholic Beverages category, a 1,3-point drop from February’s 0,8 percent, while non-food inflation moderated to 0,2 percent from 0,3 percent.
Despite this moderation, the erosion of disposable incomes persists, limiting consumer spending power.
The high cost of living, coupled with wage stagnation, continues to strain households, potentially dampening overall economic growth.
Year-on-year USD inflation, while showing signs of moderation, remains elevated. The cost of essential goods and services continues to rise at a rate that far outpaces income growth.
Households, particularly in urban areas, are finding it increasingly difficult to maintain purchasing power.
Real wages have barely kept pace with inflation, if at all. This has a knock-on effect on aggregate demand, as consumer expenditure constitutes a significant portion of GDP.
Government-funded infrastructure projects
The Government’s commitment to infrastructure development is evident in the allocation of ZiG 58,6 billion for the 2025 Infrastructure Investment Programme.
However, Treasury has cautioned about scarce resources, which may hinder project execution.
Prioritising ongoing projects at advanced stages of completion is a strategic move, yet the existing debt to contractors poses a significant challenge. Delayed payments could lead to project slowdowns or suspensions, affecting sectors reliant on improved infrastructure.
By early 2025, Treasury’s debt to contractors has swelled to US$1,2 billion, a staggering figure that highlights the constraints faced by the fiscus. Infrastructure projects in transport, energy, and water provision remain on the government’s priority list.
However, with limited fiscal space, new projects are likely to be postponed or scaled down. The most immediate consequence of these funding challenges will be seen in the construction sector, which has been a significant employer and contributor to GDP growth.
Moreover, the slowdown in infrastructure spending may have ripple effects across related industries. Cement manufacturers, steel suppliers, and transport logistics companies are already bracing for reduced demand.
Additionally, the ambitious goal of achieving energy self-sufficiency through new power generation projects may face delays, further complicating efforts to address the nation’s energy deficit.
Economic growth projections
Official projections anticipate a 6 percent economic growth in 2025, driven by recoveries in agriculture, electricity generation, and mining. However, these forecasts may be overly optimistic.
Given the potential volatility in mineral commodity prices and domestic constraints, growth could realistically align closer to the 4.5 percent–5 percent range. This tempered outlook underscores the need for diversified economic strategies beyond commodity dependence.
Zimbabwe’s growth story is also hampered by structural weaknesses. While agriculture is expected to rebound from the previous year’s drought-induced contraction, climatic uncertainties remain a persistent risk.
Electricity generation, although set to improve with new investments in solar and hydro projects, is still insufficient to meet industrial and domestic needs consistently. Manufacturing remains under pressure due to outdated machinery, high production costs, and limited access to affordable financing.
Additionally, the broader global economic environment presents both opportunities and threats.
While high commodity prices are a boon for Zimbabwe’s mineral exports, geopolitical tensions, and fluctuations in demand from key markets can quickly alter the growth trajectory. A slowdown in China, for instance, would have adverse effects on platinum and chrome exports.
Monetary policy and interest rates
The Reserve Bank of Zimbabwe maintained the benchmark interest rate at 35 percent as of December 2024, reflecting a tight monetary policy stance aimed at anchoring inflation expectations. If adjustments are to occur, they might be considered in the fourth quarter of 2025, contingent upon sustained moderation in year-on-year ZiG inflation.
Any premature easing could risk reigniting inflationary pressures, while prolonged tightness may stifle credit growth and investment.
Monetary authorities are walking a tightrope. While higher interest rates have helped stabilise the currency and curb runaway inflation, they have also made borrowing prohibitively expensive for most businesses. The banking sector remains cautious, with credit growth largely limited to short-term loans. Long-term financing, essential for capital-intensive industries such as manufacturing and construction, remains elusive.
Conclusion
Zimbabwe’s economic landscape in 2025 is poised at a delicate balance. While favourable gold prices and government initiatives offer potential growth avenues, underlying challenges in inflation control, infrastructure financing, and sectoral efficiencies cannot be overlooked.
A holistic approach, emphasizing structural reforms, fiscal discipline, and economic diversification, is imperative to navigate the complexities ahead and achieve sustainable development.
As I pen down this final edition of “Economy Uncensored,” it is my hope that the insights shared over the years have contributed meaningfully to public discourse and policy consideration. The journey has been both rewarding and challenging.
I leave with gratitude to Business Weekly for the platform and to you, the readers, for your unwavering engagement and support. May Zimbabwe’s economy finds its footing, not just in statistics but in the real, lived experiences of its people.
Tapiwanashe Mangwiro is a resident economist with the Business Weekly and writes this in his own capacity. @willoe_tee on twitter and Tapiwanashe Willoe Mangwiro on LinkedIn
