Zimbabwe’s Economy Surges as GDP Doubles in 2023

Survey by World Economics includes informal sector in GDP estimates

by Motoni Olodun

Zimbabwe’s gross domestic product (GDP) reached US$66 billion in 2023, according to a survey by World Economics, a financial analysis firm. This is a remarkable increase of 88 per cent from the official estimate of US$35 billion at the end of 2022. The survey attributes the economic growth to the inclusion of the informal sector, which accounts for a large share of the country’s economic activity.

The informal sector in Zimbabwe comprises mainly small-scale traders, farmers, and service providers who operate outside the formal tax and regulatory system. According to some estimates, the informal sector contributes more than 60 per cent of the country’s GDP and employs more than 80 per cent of the workforce. However, the informal sector is often excluded from official statistics due to data limitations and measurement challenges.

World Economics has developed a database that presents GDP in purchasing power parity terms, which adjusts for differences in price levels across countries, and adds estimates for the size of the informal economy and adjustments for out-of-date GDP base year data. The database provides a more comprehensive and realistic view of the economic activity in over 155 countries, including Zimbabwe.

The survey also projects Zimbabwe’s GDP to grow by 5.1 percent in 2024, as the country implements its National Development Strategy 1 (2021-2025), which aims to achieve upper middle-income status by 2030. The strategy focuses on macroeconomic stability, governance reforms, infrastructure development, social services, and human capital development.

Zimbabwe’s economic recovery is also supported by the improved performance of the agriculture and mining sectors, which are the main drivers of growth and exports. The country expects to harvest 2.3 million tonnes of maize in 2023, a 58% increase from the previous season, due to favourable rainfall and increased use of improved seeds and fertilizers. The mining sector is also expected to benefit from the increased global demand and prices for gold, platinum, and diamonds.

However, the survey notes that Zimbabwe still faces significant challenges and risks, such as the COVID-19 pandemic, high public debt, foreign currency shortages, low domestic savings, and weak business confidence. The survey urges the government to continue with its economic reforms, such as strengthening the rule of law, enhancing fiscal and debt transparency, reducing distortive subsidies, and resolving the arrears to international financial institutions.

The survey also calls for more support from the international community, especially in the areas of debt relief, humanitarian assistance, and COVID-19 vaccination. Zimbabwe has been under sanctions from some Western countries for more than two decades, which have limited its access to external financing and markets. The country has also been hit hard by the COVID-19 pandemic, which has claimed more than 2,000 lives and infected more than 100,000 people.

Despite the challenges, the survey expresses optimism that Zimbabwe has the potential to achieve sustained and inclusive growth if it can harness its abundant natural and human resources, and implement sound policies and reforms. The survey concludes that Zimbabwe is on the right track to overcoming its economic difficulties and achieve its vision of becoming a prosperous and resilient nation.

Source: The Herald


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