FITCH Solution has projected a sharp drop for Zimbabwe’s economic growth from an estimated 5 percent in 2023 to just 1,9 percent in 2024.
The British think-tank’s projection aligns with similar outlooks from the government and the World Bank, both anticipating a sharp economic decline in 2024, largely due to reduced agricultural output from El Niño-driven drought.
The World Bank recently adjusted its forecast to 2 percent from the 3,3 percent projected in April.
Fitch, however, anticipates a rebound to a growth of 4,1 percent in 2025.
The expected economic deceleration is attributed primarily to the severe drought conditions driven by El Niño, along with ongoing power outages and exchange rate instability.
These issues are predicted to hit key sectors hard, particularly agriculture, which could have a ripple effect on household incomes.
“These factors will notably impact agricultural output, which we expect to contract by 21,2 percent in 2024, thereby reducing household incomes. However, we forecast a recovery in 2025, with real GDP growth rebounding to 4,1 percent as weather conditions normalise and electricity supply improves,” said Orson Gard, an analyst from Fitch Solutions’ Sub-Saharan Africa Country Risk team.
Gard added that while the mining sector, especially gold, nickel, and lithium, will continue to attract foreign investment, this support may only offset some of the anticipated economic strain.
“Additionally, infrastructure development projects and robust foreign remittances will provide some growth tailwinds,” he noted.
However, Gard cautioned that the expected 2025 rebound may not signal robust economic expansion but rather a statistical recovery from the low base set in 2024.
“Even so, we see the 2025 growth recovery as largely a function of a low statistical base from 2024, with limited scope for an above-trend increase in output,” he explained.
This downward revision reflects the anticipated negative effects of the drought and the ongoing decline in global commodity prices.
The World Bank sees the southern African nation’s economy growing by 6,2 percent next year.