A STUDY ON MACROECONOMY OF

ZIMBABWE

•PRESENTED BY: •SUBMITTED TO: DR. B VENKATRAJA

•SUPRAV SAHA 18026 •GROUP:5
•TRILOCHAN MOHANTA 18027
•VASUDHA DALMIA 18029
•ADARSH 18031
•AMITABH PATHAK 18032
 Zimbabwe, officially the
Republic of Zimbabwe,
is a landlocked country
Robert Mugabe, leader
located in southern
of the ZANU party, was
Africa, between the
the country's first Prime
Zambezi and Limpopo
Minister and Head of
rivers, bordered by
Government.
South Africa, Botswana,
Zambia and

Snapshot of Mozambique

Zimbabwe Zimbabwe dollar lost

71.5% of its value
In 2000, the
against the US dollar on
government pressed
14 November 1997
ahead with its Fast
(Black Friday), and the
Track Land
stock market crashed,
Reform programme
wiping 46% from the
value of shares.
 By 2003, the country's economy had
collapsed. It's estimated that up to a
fourth of Zimbabwe's 11 million
people had fled the country. Three-
quarters of the remaining Subsequently, the economy
Zimbabweans were living on less experienced anemic growth which
than one US dollar a day. averaged 2.9% from 2009 to 2016.

2003 2009–2016

Cont.
2008

In the period from 1999 to 2008,

Zimbabwe’s GDP declined by 52%.
This ended in 2008 in a period of
hyperinflation and dollarization of
the economy.
 •Since independence in 1980, Zimbabwe has implemented no less than
17 economic blueprints as follows:
• Growth with Equity (1981)
• Transitional National Development Plan (1982-1985)
• First Five Year National Development Plan (1986-1990)
• Economic Structural Adjustment Programme (ESAP) (1991-1996)
• ZIMPREST (1996-2000)
• Millennium Economic Recovery Programme (MERP) (2001-2002)
• Ten Point Plan based on Agriculture (2002)
Economic • National Economic Revival Programme (NERP) (2003)
• Macroeconomic Policy Framework (2005-2006)
Blueprints • National Economic Development Priority Programme (NEDPP)
(2007)
• Zimbabwe Economic Development Strategy (ZEDS) (2008)
(aborted at conception)
• Short Term Economic Recovery Programme (STERP I) (2009-2010)
• Short Term Economic Recovery Programme (STERP II) (2010-
2012)
• Medium Term Plan (2011-2015)
• Zim Asset (2013-2018)
• Ten-Point Plan (August 2015)
• Interim Poverty Reduction Strategy paper (I-PRSP) (2016-2018).
 Zimbabwe’s economy was set on a
downward spiral by a number of factors:
• The country’s entry into the Democratic Republic of the Congo
(DRC) war in August 1998
• Recourse to populist policies such as: setting prices at levels below
viability
• Unsustainable budget deficits and unmanageable public sector
debt
• Fixing of the exchange rate, resulting in volatile and unpredictable
exchange-rate systems (multiple exchange rates); fiscal
indiscipline;
• Failure to meet its debt obligations that resulted in the loss of
support from the international financial institutions (IFIs) in 1999
• The invasion of white-owned farms and the chaotic fast-track land
reform
• Uncontrolled monetary expansion driven by quasi-fiscal activities
• This culminated in hyperinflation, starting in February 2007, and
the economic paralysis of 2008, when capacity utilization dipped
below 10% and widespread commodity shortages occurred. At the
last official count, Zimbabwe’s hyperinflation reached 231 million
% in July 2008.
Inflation
Unemployment
 • In 2018, GDP for Zimbabwe was 19.37 billion US dollars. The
World Bank has projected that Zimbabwe's Gross Domestic
Product (GDP) will grow by 3.7% in the year 2019.
• Zimbabwe GDP per capita was last recorded at level of 1079.61
US dollars in 2017, up from 1029.08 US dollars in the 2016.
• The annual inflation rate in Zimbabwe increased to 59.39
percent in February of 2019 from 56.9 percent in January. On a

PRESENT monthly basis, consumer prices went up 1.67 percent,

following a 10.75 percent jump in January.
• Unemployment Rate in Zimbabwe decreased to 5.16 percent in
SCENARIO 2017 from 5.18 percent in 2016.
• Apart from U.S Dollar other currencies like South African Rand,
Botswana Pula, Pound Sterling, Euro, Australian Dollar, Chinese
Yuan, Indian Rupee, and Japanese Yen are Still accepted as
legal currency Within the country,.
• The New Monetary policy measures are being introduced in
Zimbabwe. This includes the following measures: -
 • Establishment of an Inter-bank Foreign Exchange
Market
• Liquidity Management
• International Financial Reporting Standard (IFRS)
9 Implementation
• Macro-Prudential Policy Framework
• Anti-money Laundering Measures
• Zimbabwe also introduced New Fiscal Policy Measures.
This includes the following measures –
• Financing of Deficit
• Reforms of State Owned Enterprises
• External Debt Arrears Resolution
• Revenue collection measures
• International Financial Institutions and Partners
• As on December 2018, foreign debt stood at $7.5
billion and was expected to increase to $7.8 billion. It is
over 200% of the country's GDP.
 CONCLUSION

• Despite the headwinds, the economy is projected to grow by 4.2% in 2019 and 4.4% in
2020. The high and unsustainable debt-to-GDP ratio; the high fiscal deficit; the cash
shortages, three-tier pricing, and limited availability of foreign exchange, which continue to
constrict economic activity; and the persistent shortage of essential goods, including fuel
and consumer goods, remain the major headwinds for any meaningful economic recovery.
The agricultural sector and mining are expected to be the main drivers of growth, backed
by increased public and private investment.