HARARE — Zimbabwe’s recent macroeconomic stabilisation has created a potentially important window to accelerate structural transformation, but the country will need to convert price and currency stability into higher productivity, investment and formal employment, the World Bank has warned.
In its newly released Zimbabwe Growth and Jobs Report, the World Bank says fiscal and monetary discipline has brought local-currency inflation into single digits for the first time since 1997, while real GDP growth averaged almost 6% between 2021 and 2025.
The improvement, however, has yet to translate into sufficiently broad-based gains in household incomes and productive employment.
About 80% of Zimbabweans remain employed in the informal economy, with median monthly earnings of around US$130, while nearly half of the population remains below the international poverty line. The report says labour has increasingly moved from agriculture into low-productivity retail and informal services rather than into manufacturing and higher-value services.
The World Bank says Zimbabwe now has an opportunity to build on the stabilisation gains.
“The central task now is ensuring that macroeconomic stability translates into more and better economic opportunities for Zimbabweans and better living standards,” said Firas Raad, World Bank Division Director for Malawi, Tanzania, Zambia and Zimbabwe.
He said this would require removing infrastructure bottlenecks, particularly in power, transport and irrigation, while creating a more predictable investment environment and attracting additional private capital.
The economic implications are substantial.
Under a business-as-usual scenario, the World Bank projects average growth of about 4% through 2030, which would delay Zimbabwe’s attainment of upper-middle-income status until 2036.
A more ambitious reform programme, however, could lift real GDP by 10.7% above the baseline by 2030 and 26.9% by 2040, while generating up to 230,000 additional jobs and increasing real earnings per worker by more than 30% over the period.
For Zimbabwean economic analysts, the report effectively shifts the policy debate from stabilisation to transformation.
An economist speaking to The Zimbabwe Financial Mail said the significance of the report was that it recognised that macroeconomic stability was a necessary condition for growth, but not an end in itself.
“Zimbabwe has historically struggled to convert periods of macroeconomic stability into sustained investment and productivity growth. The central policy question now is whether stability can become an investment platform rather than simply a temporary macroeconomic outcome,” the economist said.
Another economic expert told The Zimbabwe Financial Mail that the informalisation of the labour market represented perhaps the clearest measure of the disconnect between headline GDP growth and household welfare.
“An economy can expand while households remain poor if growth is concentrated in activities with weak employment multipliers and low labour productivity. The structural objective must therefore be to move workers from subsistence and low-productivity informal activities into productive firms capable of generating higher wages and sustained employment,” the analyst said.
Power remains the binding constraint
The World Bank places infrastructure at the centre of Zimbabwe’s growth challenge, with electricity reliability emerging as one of the most significant constraints on firms and households.
Electricity shortages are estimated to cost the economy approximately 6.1% of GDP annually, highlighting the extent to which inadequate power supply suppresses industrial output, investment and productivity.
The Bank argues that Zimbabwe needs a combination of public and private investment to close the infrastructure deficit, particularly in energy, transport and irrigation.
World Bank senior economist and report lead author Victor Steenbergen said the country could not afford to squander the stabilisation gains.
“The window of opportunity created by recent stabilisation is open, but decisive and coordinated execution over multiple years will be essential,” Steenbergen said.
He added that concentrating initially on power-sector reliability and trade facilitation could produce rapid economic dividends before deeper legal and financial-sector reforms are implemented to strengthen investor confidence.
The report recommends four broad areas of intervention: maintaining macroeconomic stability and resolving external arrears; expanding foundational infrastructure; reducing the regulatory burden on businesses; and strengthening the conditions for private-sector investment.
From stability to structural transformation
The World Bank’s assessment comes at a significant juncture for Zimbabwe, where monetary authorities have been pursuing currency and monetary reforms alongside efforts to restore macroeconomic credibility.
Analysts said the challenge is now to ensure that monetary stability is transmitted into the real economy through lower risk premiums, deeper financial intermediation, increased investment and greater access to productive credit.
“The real test of stabilisation is not simply whether inflation falls,” another economist told The Zimbabwe Financial Mail. “It is whether businesses begin investing with greater confidence, whether firms expand production, and whether that expansion generates formal employment and higher real incomes.”
The World Bank also identifies agriculture, mining, manufacturing and tourism as sectors capable of supporting a more productive growth model, provided Zimbabwe addresses constraints around infrastructure, investment protection, land tenure, finance and regulation.
For policymakers, the report therefore presents a relatively straightforward proposition: stabilisation has created the opportunity, but structural reform will determine whether Zimbabwe can convert that opportunity into sustained economic transformation.
As Steenbergen put it, the immediate focus on reliable power and trade facilitation should ultimately provide the foundation for broader institutional reforms capable of establishing lasting investor confidence.
