ECONOMY
Properly managed, Zimbabwe's wide range of resources should enable it to support sustained economic growth. The country has an important percentage of the world's known reserves of metallurgical-grade chromite. Other commercial mineral deposits include coal, platinum, asbestos, copper, nickel, gold, and iron ore. However, for the country to benefit from these mineral deposits, it must attract foreign direct investment.
In the
early 1970s, the economy experienced a modest boom. Real per capita
earnings for blacks and whites reached record highs, although
the disparity in incomes between blacks and whites remained, with
blacks earning only about one-tenth as much as whites. After 1975,
however, Rhodesia's economy was undermined by the cumulative effects
of sanctions, declining earnings from commodity exports, worsening
guerilla conflict, and increasing white emigration. When Mozambique
severed economic ties, the Smith regime was forced to depend on
South Africa for access to the outside world. Real gross domestic
product (GDP) declined between 1974 and 1979. An increasing proportion
of the national budget (an estimated 30%-40% per year) was allocated
to defense, and a large budget deficit raised the public debt
burden substantially.
Following the Lancaster House settlement in December 1979, Zimbabwe enjoyed a brisk economic recovery. Zimbabwe inherited one of the strongest and most complete industrial infrastructures in sub-Saharan Africa, as well as rich mineral resources and a strong agricultural base. Real growth for 1980-81 exceeded 20%. However, depressed foreign demand for the country's mineral exports and the onset of a drought cut sharply into the growth rate in 1982, 1983, and 1984. In 1985, the economy rebounded strongly due to a 30% jump in agricultural production. However it slumped in 1986 to a zero growth rate and registered a 3% contraction in GDP in 1987 due primarily to drought and a foreign exchange crisis. Growth in 1988-90 averaged about 4.5%.
Since the mid-1990s, this infrastructure has been deteriorating rapidly, but remains better than that of most African countries. Poor management of the economy and political turmoil have led to considerable economic hardships. The Government of Zimbabwe's chaotic land reform program, recurrent interference with the judiciary, and maintenance of unrealistic price controls and exchange rates have led to a sharp drop in investor confidence. Since 1999, the national economy has contracted by as much as 40%; inflation vaulted over 1,000,000% (year on year) in May 2008; and there have been persistent shortages of foreign exchange, fuel, and food. Direct foreign investment has all but evaporated. In a desperate attempt to control inflation, the government forced firms and supermarkets to reduce prices by half in July 2007, which resulted in severe shortages of basic and other commodities.
Agriculture is no longer the backbone of the Zimbabwean economy. Large-scale commercial farming has been effectively destroyed over the course of the last eight years under the government's controversial land reform efforts starting in 2000. Corn is the largest food crop and tobacco had traditionally been the largest export crop, followed by cotton. Tobacco production in 2006, however, slumped to its lowest level--about 50 million kg--since independence, off from a peak in 2000 of 237 million kg, before recovering to 73 million kg in 2007. Gold production, another former key foreign currency source, was less than one-third of its 1999 level in 2007. Poor government management has exacerbated meager corn harvests in years of drought or floods, resulting in significant food shortfalls every year since 2001.
Paved roads link the major urban and industrial centers, but the condition of urban roads and the unpaved rural road network has deteriorated significantly since 1995 for lack of maintenance. Rail lines connect with an extensive central African railroad network, although railway track condition has also worsened in recent years, along with locomotive availability and utilization. The electric power supply has become erratic and blackouts are common due to unreliable or nonexistent coal supplies to the country's large thermal plants and power plant breakdowns. Telephone service is problematic, and new lines are difficult of obtain. Municipal water supply is also erratic.
The largest
industries are iron, steel, metal products, food processing, chemicals,
textiles, clothing, furniture and plastic goods. Most manufacturers
have scaled back operations. Zimbabwe is not a member of the African
Growth and Opportunity Act and a number of textile businesses
have migrated to other African countries. Zimbabwean producers
still export lumber products, certain textiles, chrome alloys
and automobile windscreens to the U.S.
Zimbabwe
is endowed with rich mineral resources. Exports of gold, asbestos,
chrome, coal, platinum, nickel, and copper could lead an economic
recovery one day. No commercial deposits of petroleum have been
discovered, although the country is richly endowed with coal-bed
methane gas that has yet to be exploited.
With international attractions such as Victoria Falls, the Great Zimbabwe stone ruins, Lake Kariba, and extensive wildlife, tourism historically has been a significant segment of the economy and contributor of foreign exchange. The sector has contracted sharply since 1999, however, due to the country’s declining international image.
Energy
Resources
With considerable hydroelectric power potential and plentiful coal deposits for thermal power station, Zimbabwe is less dependent on oil as an energy source than most other comparably industrialized countries, but it still imports 40% of its electric power needs from surrounding countries--primarily Mozambique. Only about 15% of Zimbabwe's total energy consumption is accounted for by oil, all of which is imported. Zimbabwe imports about 1.2 billion liters of oil per year. Zimbabwe also has substantial coal reserves that are utilized for power generation, and coal-bed methane deposits recently discovered in Matabeleland province are greater than any known natural gas field in Southern or Eastern Africa. In recent years, poor economic management and low foreign currency reserves have led to serious fuel shortages.
GDP (2007 IMF est.): U.S. $1.437 billion.
Real GDP growth rate (2007 IMF est.): -6.1%.
Real per capita GDP: Reliable estimates of current GDP and population size are unavailable.
Avg. inflation rate: 1,694,000% year-on-year, May 2008, by official accounts; private sector estimates are roughly one and half times the official figure).
Natural resources: Deposits of more than 40 minerals including ferrochrome, gold, silver, platinum, copper, asbestos; 19 million hectares of forest (2000).
Agriculture (15% of GDP): Types of crops and livestock--corn, cotton, tobacco, wheat, coffee, tea, sugarcane, peanuts, cattle, sheep, goats, pigs.
Industry: manufacturing, public administration, commerce, mining, transport and communication.
Trade (2007): U.S. exports--U.S. $105.2 million. U.S. imports--U.S. $71.8 million. Partners (2000 est.)--South Africa 22%, U.K. 10%, Germany 9%, U.S. 8%. Total imports (2004)--U.S. $1.989 billion: most of these imports were construction and agricultural machinery, transportation equipment, data processing equipment and software, industrial machinery, pharmaceuticals, fertilizers, and general manufactured products. Major suppliers--South Africa 34%, U.K. 10.8%, Germany 7.3%, U.S. 6%. (Although China is now said to be the second-largest trading partner, no statistics are available.)
