Zimbabwe's economic growth rate will double next year as the country recovers from a devastating drought and benefits from a surge in manufacturing activity, the government estimates.

The Ministry of Finance, Economic Development and Investment Promotion said in a research paper that gross domestic product is likely to expand by 6.5 percent in 2025, up from a projected 2 percent this year.

The worst drought in 40 years has led to crop failures and increased food insecurity, prompting President Emmerson Mnangagwa to declare a state of national disaster in April. The country is seeking help from the UN World Food Programme, and its millers have also said they will have to import about 1.4 million tonnes of maize to meet demand.

“The southern African country's economy is expected to benefit from a rebound in agriculture, driven by an expected normal to above normal rainfall season, and from increased activity in the manufacturing sector, which will benefit from investment in new steel production,” the report said.

The agricultural sector is projected to grow by 23.6% next year, compared with an estimated contraction of 21.2% in 2024.

A unit of Chinese holding group Tsingshan recently began steel production at its new plant in central Zimbabwe.

The report also noted the April introduction of a new bullion-backed currency, ZiG, as a key step in the de-dollarization program and an attempt to “restore a single-currency regime backed by a national currency that can stimulate domestic production and increase exports by making local products more competitive in international markets.”

The ministry said that while ZiG policies have “significantly stabilized the macroeconomic environment,” consistent implementation of policy reforms, well-managed liquidity injections into the domestic market, and foreign exchange generation and supply are needed to ensure sustainability in the medium and long term.

Other important points:

The budget deficit is expected to be 1.5% of GDP in 2025, with revenue projected at Rs 103.2 billion ($7.5 billion) and expenditure at Rs 111.7 billion.
At the end of June, Zimbabwe's debt amounted to ZZ287.2 billion, 58.7% of which was external liabilities.
To support de-dollarization, taxpayers will have to pay a significant portion of their liabilities in local currency; other taxes and payments for public services will have to be paid exclusively in ZiG.

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