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- GDP (PPP):
- $28.1 billion
- 1.5% growth
- 6.5% 5-year compound annual growth
- $2,096 per capita
- Inflation (CPI):
- FDI Inflow:
Zimbabwe’s economy is characterized by instability and volatility, both of which are hallmarks of excessive government interference and mismanagement. Massive corruption and disastrous economic policies have plunged Zimbabwe into poverty. The government’s near bankruptcy has triggered large protests over unpaid civil service wages and a continuing economic crisis.
The financial system has suffered from repeated crises. The lingering effects of years of hyperinflation have crippled entrepreneurial activity, severely undermining macroeconomic stability. The government has used the Reserve Bank of Zimbabwe to finance deficit spending and provide direct loans to state-owned enterprises. An inefficient judicial system and general lack of transparency severely exacerbate business costs and entrepreneurial risk.
In March 2013, Zimbabweans approved a new constitution to roll back presidential power. In July 2013, however, President Robert Mugabe of the Zimbabwe African National Union–Patriotic Front (ZANU–PF) won a seventh term in power since his first election as prime minister in 1980. In 1987, Mugabe consolidated power as president. Zimbabwe’s next presidential and legislative elections are due to be held in 2018, but Mugabe’s increasing frailty has touched off a bitter succession struggle within ZANU–PF. Inflation reached 500 billion percent in 2008, forcing the country to scrap the Zimbabwean dollar and allow use of other currencies, including the U.S. dollar.
The government enforces property rights with respect to residential and commercial properties in cities, but not with respect to agricultural land. While Zimbabwe continues to struggle with the internal factionalism of both ruling and opposition parties, the judiciary has shown increasing independence by deciding against powerful political interests, including ruling party elites. Nevertheless, corruption remains a severe problem at every level of government.
The top personal income tax rate is 51.5 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax and a capital gains tax. The overall tax burden equals 24.8 percent of total domestic income. Government spending has amounted to 28.7 percent of total output (GDP) over the past three years, and budget deficits have averaged 1.5 percent of GDP. Public debt is equivalent to 53.0 percent of GDP.
The overall regulatory environment is opaque and vulnerable to government intervention. Because of the government’s failed economic policies and continuing control, the formal labor market is not functioning. The IMF left in December 2015 with little sign of a genuine change in the government’s prioritization of its political agenda over economic management. In 2016, the government reimposed import and currency controls.
Trade is important to Zimbabwe’s economy; the value of exports and imports taken together equals 75 percent of GDP. The average applied tariff rate is 13.6 percent. The government screens and limits foreign investment. Expropriation of land has been called a disaster, and state-owned enterprises distort the economy. Government intervention, inadequate supervision, and political instability have severely undermined the financial system.