Zimbabwe central bank reports drop in inflation

The Reserve Bank of Zimbabwe (RBZ) has expressed cautious optimism about the country's economic trajectory, citing encouraging signs in inflation control, exchange rate stability, and foreign currency inflows. The outlook was contained in the central bank's Quarterly Economic Snapshot for the second quarter of 2025, released on Tuesday.

According to the report, Zimbabwe's monthly inflation measured in ZiG fell to 2.4 percent in June, a sharp decline from the 6.9 percent recorded in May. Annual inflation was pegged at 18.2 percent, which the bank attributed to the low base effect following the introduction of the ZiG currency in the second quarter of 2024. The central bank said the inflation drop was the result of tight monetary policy and improved stability in the foreign exchange market. It reaffirmed its commitment to maintaining price stability through disciplined policy measures and close coordination with fiscal authorities.

The country also recorded an increase in foreign currency receipts, which rose to US$5.13 billion in the first half of 2025. This compares favourably with the US$4.61 billion collected during the same period last year. The RBZ said the growth in inflows was driven by strong export earnings, diaspora remittances, and international development support. Payments over the same period amounted to US$4.89 billion, leaving Zimbabwe with a positive balance of payments position.

The central bank also reported exchange rate stability, with the interbank ZiG/US dollar rate averaging 26.85 in June. The narrowing gap between the official and parallel market exchange rates was cited as evidence of growing public confidence in the monetary system. Additionally, the Real Effective Exchange Rate remained within acceptable levels, preserving the competitiveness of Zimbabwean exports.

In a statement accompanying the report, the RBZ said the foreign exchange market has improved significantly, with greater alignment between formal and informal trading platforms. It described this development as crucial for restoring predictability in the economy and supporting the broader recovery process.

Economic experts welcomed the snapshot as a sign that Zimbabwe's economic fundamentals are beginning to stabilise. Economist Gerald Mukusha said the central bank had struck a delicate balance between controlling inflation and maintaining enough liquidity in the system. He noted that the reduced parallel market premium was a sign that public confidence in the ZiG currency is gradually returning. Another analyst, Rumbidzai Madondo, said the combination of falling inflation and rising forex inflows suggested strengthening macroeconomic fundamentals. However, she stressed the need for continued policy discipline and transparent communication from the central bank.

The RBZ said reserve money levels have remained steady, and that foreign currency deposits now account for over 84 percent of the country's broad money supply. It concluded that the economy is likely to remain resilient during the second half of 2025, provided that monetary discipline is maintained, liquidity is managed effectively, and the external sector continues to perform strongly.

The central bank's update is expected to shape upcoming fiscal decisions and influence investor sentiment as Zimbabwe moves toward finalising its 2025 national budget.