Harare- Zimbabwe’s economy is projected to moderate to 3.5% growth in 2027, down from an anticipated 5% this year, as the country braces for a potential “Super El Niño” drought, Finance and Economic Development Minister Professor Mthuli Ncube has announced.

Presenting at the 2027 National Pre-Budget Seminar in Bulawayo, today under the theme “Accelerating Economic Transformation and Building Resilience to Climate and Global Shocks,” Prof Ncube painted a picture of a resilient economy that has achieved historic milestones, including single-digit inflation for the first time in three decades, but faces significant headwinds from global geopolitical shocks and domestic climate risks.

According to the presentation, the 2027 National Budget will pursue fiscal consolidation with an overall budget deficit target of less than 3% of GDP, anchored on the National Development Strategy 2 (NDS2) and Vision 2030.

Ncube told legislators that the economy grew by a remarkable 8.3% in 2025, making it one of the fastest-growing economies in Africa and second only to Ethiopia. Growth was broad-based, driven by a 27.9% rebound in agriculture, 14.9% in electricity, and 10.4% in both transport and mining.

For the first time in over three decades, annual inflation has fallen into single digits, standing at 3.7% in September 2026, down from a peak of 95.8% in July 2025. The Zimbabwe Gold (ZiG) currency has also stabilised, averaging ZiG26.04 per US dollar between January and August 2026, with the gap between official and parallel market rates narrowing to below 20%.

Ncube attributed this stability to disciplined monetary policy, including a reduction in the bank policy rate from 35% to 27.5% by September 2026. However, the Minister highlighted the impact of global shocks, particularly the Middle East conflict and the disruption of the Strait of Hormuz, which pushed Brent crude oil to around US$120 a barrel in April 2026, raising the country’s fuel import bill. Government responded by removing diesel taxes to cushion domestic fuel prices.

Despite record-breaking agricultural output, including tobacco production reaching 359 million kilograms and the national cattle herd growing to 5.9 million, the 2027 outlook is clouded by climate risks. The Treasury boss warned that a Super El Niño is expected to bring drought conditions, projecting a decline in tobacco production to 310 million kilograms and setbacks for the agricultural sector.

To mitigate the impact, Cabinet has approved a 6-Pillar Drought Plan, including an enhanced strategic grain reserve targeting 600,000 metric tonnes by October 2027 and the acceleration of irrigation development.

Preliminary figures for January to September 2026 show revenue collections at ZiG224.67 billion against expenditures of ZiG188.68 billion, yielding a cash surplus of ZiG36 billion, which was directed towards servicing government loan obligations and arrears.

To year-end, revenues are projected at ZiG287.64 billion (US$9.4 billion) against expenditures of ZiG290.88 billion (US$9.5 billion).

The Minister called on legislators to ensure ministries spend within budgeted frameworks and to assist in sequencing priorities for sustainable revenue mobilisation.

The economy is projected to recover to 5.8% growth in 2028, with the mining sector, contributing 15.9% to GDP and two-thirds of export earnings, expected to grow by 5.1% in 2027, supported by record gold output and the emerging lithium industry.