Zimbabwe's Economy Turning Around Faster Than Expected: Citi

Zimbabwe's economy may be rebounding more rapidly than anticipated, with global banking giant Citigroup identifying indicators of a significant turnaround after years of instability. The country is moving away from its history of high inflation, currency volatility, and monetary financing, though its past economic troubles could still deter investors from recognizing the current changes.

"Where perceptions and reality may now be increasingly out of kilter is the speed with which an economic turnaround has started to play out in Zimbabwe since 2025," wrote David Cowan, Citi's chief Africa economist, in a client note. The bank projects annual inflation, which averaged around 736% in 2024, to decrease to 8% this year. It also anticipates the cash fiscal deficit moving into balance after reaching 6.7% of gross domestic product in 2023.

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Where perceptions and reality may now be increasingly out of kilter is the speed with which an economic turnaround has started to play out in Zimbabwe since 2025.

Cowan noted that fiscal issues have long underpinned the country's poor macroeconomic performance, with Zimbabwe experiencing economic contractions in six of the twenty years between 2005 and 2024. Citi attributes the improved outlook to several factors: elevated international gold prices, growth in the lithium sector, the introduction of the gold-backed ZiG currency in 2024, and the government's decision to cease printing money to fund the budget. The recent approval of a 10-month staff-monitored program with the International Monetary Fund in April has also bolstered the reform process.

However, Citi cautioned that Zimbabwe's debt remains unsustainable and "in distress." The ongoing dollarization of the economy also presents challenges, potentially hindering investors' full recognition of the country's economic progress.

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Fiscal issues have long been at the heart of the country's poor macroeconomic performance.