2017 Index of Economic Freedom

Zimbabwe

overall score44.0
world rank175
Rule of Law

Property Rights27.3

Government Integrity14.7

Judicial Effectiveness26.1

Government Size

Government Spending75.2

Tax Burden61.1

Fiscal Health90.6

Regulatory Efficiency

Business Freedom36.2

Labor Freedom33.1

Monetary Freedom76.5

Open Markets

Trade Freedom52.8

Investment Freedom25.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 13.4 million
  • GDP (PPP):
    • $28.1 billion
    • 1.5% growth
    • 6.5% 5-year compound annual growth
    • $2,096 per capita
  • Unemployment:
    • 9.3%
  • Inflation (CPI):
    • -2.4%
  • FDI Inflow:
    • $421.0 million
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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.

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Background

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.

Rule of LawView Methodology

Property Rights 27.3 Create a Graph using this measurement

Government Integrity 14.7 Create a Graph using this measurement

Judicial Effectiveness 26.1 Create a Graph using this measurement

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.

Government SizeView Methodology

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.

Regulatory EfficiencyView Methodology

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.

Open MarketsView Methodology

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.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius74.70.0
2Botswana70.1-1.0
3Rwanda67.64.5
4Côte d'Ivoire 633.0
5Namibia62.50.6
6South Africa62.30.4
7Seychelles61.8-0.4
8Swaziland61.11.4
9Uganda60.91.6
10Burkina Faso59.60.5
11Benin59.2-0.1
12Mali58.62.1
13Gabon58.6-0.4
14Tanzania58.60.1
15Madagascar57.4-3.7
16Nigeria57.1-0.4
17Cabo Verde56.9-9.6
18Democratic Republic of Congo56.410.0
19Ghana56.2-6.8
20Guinea-Bissau56.14.3
21Senegal55.9-2.2
22Comoros55.83.4
23Zambia55.8-3.0
24São Tomé and Príncipe 55.4-1.3
25Mauritania54.4-0.4
26Lesotho53.93.3
27Kenya53.5-4.0
28The Gambia53.4-3.7
29Togo53.2-0.4
30Burundi53.2-0.7
31Ethiopia52.71.2
32Sierra Leone52.60.3
33Malawi52.20.4
34Cameroon51.8-2.4
35Central African Republic51.86.6
36Niger50.8-3.5
37Mozambique 49.9-3.3
38Liberia49.1-3.1
39Chad492.7
40Sudan48.8N/A
41Angola48.5-0.4
42Guinea47.6-5.7
43Djibouti46.7-9.3
44Equatorial Guinea451.3
45Zimbabwe445.8
46Eritrea42.2-0.5
47Republic of Congo 40-2.8
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