Inflationary pressures threaten Zim growth

Persistent inflation and currency volatility threaten to slow Zimbabwe’s growth in 2026 despite gains in agriculture and mining (image source)

International lenders and regional economists warn that persistent inflation and exchange-rate pressure could slow Zimbabwe’s growth in 2026, trimming projected GDP expansion despite strong performances in agriculture and mining during 2025.

The African Development Bank (AfDB), IMF and World Bank expect growth to moderate next year amid sustained inflationary and forex stresses. AfDB projects 4% growth in 2026, down from roughly 6% in 2025, while Bretton Woods estimates put next year near 4.6%, both figures lower than government optimism. Policymakers face the trade-off between supporting nascent growth sectors and tightening fiscal and monetary levers to arrest inflation. Central bank measures to curb quasi-fiscal activity and monetary financing have shown signs of stabilisation, but the currency’s volatility and high ZiG inflation remain key concerns for businesses and investors.

“Inflation and forex shortages raise input and borrowing costs and squeeze margins for firms that import raw materials,” said Dr. Emmanuel Dube, macroeconomist at Harare University. “That can feed through to lower investment and slower hiring in 2026.” His view echoes multilateral institutions that tie growth prospects to macro stability and sustained policy discipline. Annual ZiG inflation surged through 2025, prompting RBZ to tighten controls; the bank signalled expectations for cooling inflation by October after earlier spikes, but analysts caution that any supply shock or fiscal slippage could reverse gains. Meanwhile, public debt remains elevated, limiting fiscal manoeuvre and increasing vulnerability to external shocks.

Zimbabwe’s 2025 rebound followed better rains and higher commodity prices, notably gold. That recovery masks structural fragility — weak fiscal buffers, shallow foreign-exchange reserves and a history of monetary financing have left the economy susceptible to renewed inflation episodes.

Exporters may gain from favourable global prices, but import-dependent manufacturers face rising domestic costs and sporadic forex allocations. Lenders and pension funds are increasingly selective, favouring large-cap, hard-currency earners; access to finance for SMEs remains constrained and could stifle private-sector-led broad-based growth.

The coming 12 months will test whether policy coherence can lock in 2025 gains. Markets will look for visible fiscal restraint, consistent RBZ policy and better reserve management; failure to deliver could see growth forecasts trimmed further and private-sector confidence ebb.