Bloomberg Zimbabwe, once a poster child of triple-digit inflation, currency crashes and printing money, is breaking with its past as an economic turnaround takes hold, according to Citigroup Inc. Yet, the southern African nation’s pariah reputation risks keeping investors from recognising the transformation taking place under the International Monetary Fund’s watch, the US-based investment bank […] The post Zimbabwe is turning around faster than anyone thinks, says US investment bank Citi appear
Bloomberg
Zimbabwe, once a poster child of triple-digit inflation, currency crashes and printing money, is breaking with its past as an economic turnaround takes hold, according to Citigroup Inc.
Yet, the southern African nation’s pariah reputation risks keeping investors from recognising the transformation taking place under the International Monetary Fund’s watch, the US-based investment bank said.
“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,” David Cowan, the bank’s chief Africa economist, wrote in a client note.
Annual inflation, which averaged around 736% in 2024, is expected to drop to 8% this year, while a cash fiscal deficit will balance after falling to minus 6.7% of gross domestic product in 2023, Cowan said.
“Fiscal issues have long been at the heart of the country’s poor macroeconomic performance,” and resulted in economic contractions in six of the 20 years from 2005 to 2024, he said.
The nation’s turnaround has been aided by high international gold prices, an emerging lithium sector, the introduction of the gold-backed ZiG currency in 2024 and an end to printing money to finance the budget, as well as a 10-month staff-monitored IMF programme approved in April.
Zimbabwe has also been engaging creditors since 2022 to overhaul its debt, which Citigroup cautions is unsustainable and in “distress.”
Zimbabwe earlier this month said France and the UK agreed to co-chair a body that will help restructure the $21.3 billion it owes creditors.
Even so, while the ZiG is stable the economy remains highly dollarised, Cowan said.
The Reserve Bank of Zimbabwe is unable to fully meet demand for foreign exchange under the current “willing buyer, willing seller” policy resulting in the existence of a parallel-exchange rate, he added. Premiums between the parallel and official market rates are under 20%.
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