Zimbabwe - Overview of economy
Since independence, Zimbabwe's primary goal has been redressing the socio-economic imbalances and restructuring the economy while maintaining growth and avoiding alienating its white population, whose skills are of vital importance to its economy. Unlike many countries in post-independent sub-Saharan Africa, Zimbabwe did not tread the nationalization path, rather choosing to purchase shares in various enterprises.
Zimbabwe has a relatively diversified economy with good infrastructure , strong manufacturing and agricultural sectors, a vigorous financial services sector, and extensive mining. Agriculture, which in 1997 contributed 28 percent of gross domestic product (GDP), is the mainstay of the economy and a major determining factor in its growth. It is diversified and well-developed in terms of food production, cash crops , and livestock. Its growth, however, has been erratic since independence in 1980. Periods of rapid economic growth have been interrupted by agricultural slumps caused largely by drought in 1992, when about 80 percent of the maize crop and an estimated 1.7 million cattle were lost, and another drought in 1995.
Zimbabwe's mining sector is diversified, currently producing over 40 different minerals. These include gold, platinum, nickel, coal, copper, silver, emeralds, graphite, granite, cobalt, quartz, kaolin, and mica. Gold is the primary source of revenue in the mining sector.
Zimbabwe produces a wide variety of manufactured goods for both local and export markets. Manufacturing is centered in the 2 major urban centers, Harare and Bulawayo. Developed within a protectionist policy , the sector enjoyed certain tariff barriers in the period from 1965 to 1979. It faced stiff competition, mostly from South Africa, after 1990 when the barriers were progressively removed.
One of the most pressing issues affecting the Zimbabwean economy concerns land redistribution. Due to costs and delays in sourcing financing, Zimbabwe has been behind schedule in the redistribution of land to landless rural families as promised in the war of liberation. This culminated in the 1999-2000 land crisis in the runup to the 2000 elections, when war veterans began occupying white-owned farms. This precipitated a crisis in the farming sector that is yet to be resolved.
The export position has been generally strong, with trade surpluses recorded in most years except during the droughts of 1992 and 1995. Government policy aims to encourage foreign investment and expand exports—a policy it has pursued since the 1990 structural adjustment programs (SAP). However, export-led growth, the reduction of government budget deficits , and low levels of inflation have proved to be elusive goals. Real GDP grew at an average annual rate of 3.6 percent between 1980 and 1990, but halved to 1.8 percent annually between 1990 and 1997. By 1995, GDP was shrinking at-0.7 percent, but by 1996 the economy was growing again at a 7.6 percent growth rate. But in 2000 and 2001, the output of the economy is thought to have contracted once more, and living standards have fallen markedly. Inflation was high through the 1990s, averaging 22.4 percent annually between 1990 and 1997, ranging from a peak of 42 percent in 1992 to a low of 19 percent in 1997. In 1999, with the political crisis, inflation had risen to 166 percent a year and currently continues to be very high.