Zim economic snapshot for Q2 2025: stability in sight amid currency, monetary adjustments

The Reserve Bank of Zimbabwe (RBZ) has released its quarterly economic snapshot for second quarter of 2025, detailing recent developments in monetary, currency, price, & financial sectors.

The update reflects a cautiously optimistic outlook, with key indicators pointing towards monetary stability, improved inflation trends, and a better-aligned foreign exchange system.

Macroeconomic Highlights:
•Monthly Inflation: Monthly ZIG inflation fell to 2.4% in June from 6.9% in May 2025, showing a continued broad-based disinflation trend.
•Annual ZIG Inflation: As of June, annual inflation stood at 18.2%.
•Bank Policy Rate: Held steady at 35%.
•Exchange Rates: The interbank ZIG/USD exchange rate averaged 26.85 in June, while the auction rate averaged Z$7.64/US$.
•Foreign Currency Receipts: Totaled US$5.13 billion from Jan–June 2025, up from US$4.61 billion in the same period in 2024.
•Broad Money Supply (M3): Increased 11.3% to ZIG 26.27 billion, largely driven by foreign currency deposits.
•Forex Deposits: Remain dominant, contributing over 84% to M3 by June 2025.

Monetary Policy and Financial Sector Developments

RBZ has maintained a conservative monetary policy stance aimed at ensuring price stability.

Key policy indicators as of 30 June 2025 include:
•Minimum Deposit Rates: ZIG savings at 4.87%, time deposits at 5.98%.
•Month-on-Month Growth in ZIG Money Supply (M3): 7.4%.
•ZIG Weekly Bank Loan Growth: Stable, with slight variations between ZIG & foreign currency lending.

Currency Usage and Transactional Trends
•ZIG use continues to expand in retail and transactional systems, aided by government policy, improved liquidity, and the ZIG interest-bearing account facility.
•Demand for local currency remains supported by fiscal & monetary measures.

Exchange Rate Developments

The interbank exchange rate showed relative stability from April to June 2025.

A declining parallel market premium suggests increased market confidence and better alignment between official and alternative rates. The Real Effective Exchange Rate (REER) remains within equilibrium bands, supporting competitiveness.

Inflation Developments
•Monthly Inflation: Decline attributed to tighter monetary policy and exchange rate stability.
•Broad-Based Decline: Core inflation also moderated, reflecting a drop in market volatility.
•Base Effect: Annual ZIG inflation increased to 18.2% due to the low base effect from Q2 2024 when the ZIG was introduced.

Foreign Currency Receipts & Payments
•Major sources of forex inflows include exports, diaspora remittances, and development partner support.
•The balance of payments remained favourable, with payments totaling US$4.89 b over the same period.

Targeted Finance Facility (TFF)

RBZ continues supporting productive sectors through the TFF, with agriculture, manufacturing, and SMEs being the largest beneficiaries.

As of June 2025, total disbursements under TFF amounted to ZIG 3.28 billion.

Reserve Money and Deposits
•Reserve money remained stable, reflecting tight monetary control.
•ZIG and foreign currency deposits have grown in tandem, showing increased confidence in the formal banking sector.

Outlook and Policy Direction

RBZ forecasts continued macroeconomic resilience supported by:
•Stability of the exchange rate.
•Sustained disinflation.
•Expected rebound in global commodity prices and economic recovery.

RBZ reiterated its commitment to data-driven monetary policy, fiscal-monetary coordination, and enhanced communication to maintain market confidence.

RBZ’s Q2 snapshot signals a positive trajectory for Zim’s economic fundamentals, underpinned by prudent monetary management, disciplined fiscal support, and foreign currency stability.

Going into the second half of 2025, inflation control and exchange rate consistency remain the cornerstones of economic policy.

Zwnews