According to the 2023 Monetary Bank Policy, there was a projected slowdown in global GDP growth from 3.4% in 2022 to 2.9% in 2023. The projected slowdown for Zimbabwe’s GDP growth was from 4.0% in 2022 to 3.8% in 2023. The Africa Development Bank has attributed the slowdown in economic growth to power outages and challenges with elections. 

Exchange rate

Bank policies have resulted in interest rates in Zimbabwe rate reducing from 200% to 150% per annum, to align with the inflation outlook. The high interest rates have resulted in an increase in the cost of borrowing thus reducing aggregate demand. The auction rate as of 24 February 2023 stands at ZWL$ 884.2323 per US dollar.  On the 17th of February the RBZ auction rate stood at ZWL$ 856.8403 per US dollar. This shows that the Zimbabwean dollar has depreciated with 3.2% in a week. When January 2023 started, the rate was on ZWL$ 671.4466 meaning that the Zimbabwean dollar has depreciated by 31.7% since the beginning of the year. This leads us to anticipate a further depreciation in the value of the Zimbabwean dollar as the year progresses.

Inflation

The country’s inflation rate still remains volatile in 2023.Zimbabwe’s annual consumer price inflation eased for the fifth straight month to a seven-month low of 229.8% in January of 2023.The Consumer Price Inflation (CPI) is a measure that examines the weighted average prices of primary needs such as transportation, food, and medical care at the consumer/retail level. Currently, Zimbabwe’s annual consumer price inflation decreased to 229.8% in January of 2023, from 243.8% in the month of December 2022. On a monthly basis, consumer prices rose by 1.1% in January 2022, the least in four years, after a 2.4% surge in December 2022. 

Fuel prices

Zimbabwe’s energy sector regulator, ZERA, made upward price revisions for diesel and petrol with both snowballing under ZWL, rising by 10.63% and 10.35% respectively on the 26th of January 2023. Diesel rose from ZW$1 188.77 up to ZW$1 315.09. Petrol rose from ZW$1 124.61 up to ZW$1 241.01. Looking ahead, recent events on the global stage that have pushed crude oil prices nearly to $90 per barrel may have an impact on Zimbabwe. But, if there is a global recession in 2023, aggregate demand may decline, which would raise fuel prices.