Published: 13 hours ago

Zimbabwe's economic recovery is facing renewed pressure, with the International Monetary Fund (IMF) projecting a slowdown in growth to 5% in 2026 - down by 2.5 percentage points from the previous year.

The forecast is contained in the IMF's Regional Economic Outlook for Sub-Saharan Africa, which highlights rising vulnerability across emerging markets as global geopolitical tensions and supply chain disruptions intensify.

At the same time, the IMF has approved a 10-month non-financing Staff-Monitored Programme (SMP) for Zimbabwe, aimed at supporting fiscal discipline, stabilisation efforts and broader economic reforms.

The Fund noted that Zimbabwe's 2025 performance was buoyed by strong agricultural output and mining activity, particularly gold, platinum and lithium production. However, it warned that these gains are now being eroded by external shocks.

A key concern is the escalation of conflict in the Middle East, which has disrupted global energy markets and supply chains. As an energy-importing economy, Zimbabwe has been directly affected, with fuel prices rising sharply in recent months.

Diesel and petrol prices previously climbed from around US$1.71 to US$2.23 before easing slightly to US$2.09, a development authorities say will continue to exert inflationary pressure.

The IMF projects inflation could rise to 8% by the end of 2026, up from March levels of 1.3% for the US dollar economy and 4.4% for the Zimbabwe Gold (ZiG) currency. Stability of the ZiG, the Fund noted, remains dependent on tight monetary policy and exchange rate discipline.

The SMP outlines a series of reforms, including improved public financial management, tighter budget controls, and the introduction of a treasury single account to enhance transparency and efficiency in government spending.

Authorities have also committed to stricter monitoring of domestic arrears and strengthening institutional accountability in fiscal management.

The IMF emphasised that sustained reforms are necessary to preserve macroeconomic stability, rebuild foreign reserves, and strengthen confidence in the local currency.

Regionally, the outlook remains subdued, with the IMF lowering Sub-Saharan Africa's growth forecast to 4.3% for 2026. Energy-importing countries without strong resource buffers are expected to remain under pressure.

Zimbabwe is also facing secondary shocks, including weaker tourism due to higher travel costs and disruptions, as well as rising fertiliser prices that could threaten agricultural output and food security.

While the IMF acknowledged recent stabilisation gains, it cautioned that the country's medium-term trajectory will depend on whether reforms under the SMP are effectively implemented.

The next 10 months are therefore seen as critical in determining whether Zimbabwe can consolidate its recovery or remain exposed to global economic volatility.
- The Standard

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