Zimbabwe Country Risk Report

Published 27 May 2015 | Quarterly

  • 40 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Zimbabwe Country Risk Report

Core Views:

  • The succession process in Zimbabwe has become somewhat clearer. The removal of Vice President Joice Mujuru at ZANU-PF's five-year congress in early December 2014 seemingly clears the path for her main rival Emmerson Mnangagwa to take the helm once Mugabe eventually departs the scene. Even so, there remains no little uncertainty over the issue, not least given that all the power now lies within the president's hands.

  • Political and policy uncertainty will continue to deter much-needed investment into the moribund Zimbabwean economy, while a depreciating South African rand and weak commodity prices will also weigh on economic activity.

  • The Zimbabwean economy will remain near deflationary territory over the coming quarters thanks to weak demand, a depreciating South African rand and low oil prices.

Major Forecast Changes:

  • A poor harvest due to drought and risks to the trade balance have prompted us to revise down our 2015 real GDP growth target to 2.4%, from a previous 2.9%..

Key Risks To Outlook:

  • The political environment presents the most salient risk to our outlook for the Zimbabwean economy. If ZANU-PF moderates its nationalistic stance, our forecasts will be rendered too pessimistic. However, if the party is even more aggressive in its efforts to indigenise the economy than we currently anticipate, GDP growth could well turn negative.

  • Premature abandonment of the foreign currency regime would likely have a negative impact on the economy.

  • The weather is also a major risk. The country has seen several droughts over the last two decades which have had a devastating impact on the important agricultural sector and there is always a risk of a recurrence of poor rains.

...
Long-Term Macroeconomic Forecasts (Zimbabwe 2015-2024)
Indicator 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f 2023f 2024f
National Sources/BMI
Nominal GDP, USDbn 14.3 15.1 16.1

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
MDC Split To Have Little Short-Term Impact
8
TABLE: POLITICAL OVERVIEW
8
Long-Term Political Outlook
9
Mugabe's New Term's Key Challenges
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
On The Ground: Liquidity Challenges Worse Than Ever
14
Table: GDP By Expenditure
14
Balance Of Payments
16
External Account Pressures To Remain
16
Table: Current Account
16
Monetary Policy
17
Deflation To Persist But Economic Damage Will Be Limited
17
Table: Monetary Policy
18
Banking Sector
19
Banking Sector Woes Continue
19
Chapter 3: 10-Year Forecast
21
The Zimbabwean Economy To 2023
21
Policy Risks To Constrain Long-Term GDP Growth
21
Tab le: ZIMBABWE Long -Term Forecasts
21
Chapter 4: Business Environment
23
SWOT Analysis
23
BMI Business Environment Risk Ratings
23
Business Environment Outlook
24
Institutions
24
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
24
Table: BMI LEGAL FRAMEWORK RATING
25
Infrastructure
26
Table: LABOUR FORCE QUALITY
26
TABLE: AFRICA - ANNUAL FDI INFLOWS
27
Market Orientation
28
Table: TRADE AND INVESTMENT RATINGS
29
Operational Risk
30
TABLE: TOP EXPORT DESTINATIONS (USDmn)
30
Chapter 5: BMI Global Assumptions
31
Global Outlook
31
Growth Increasingly Polarised
31
Table: Global Assumptions
31
Tab le: Developed States , Rea l GDP Growt H, %
32
Tab le: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
32
Tab le: Emerging Mar kets , Rea l GDP Growth , %
33

The Zimbabwe Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Zimbabwe. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Zimbabwe's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.

Key Uses

  • Forecast the pace and stability of Zimbabwe's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Zimbabwe's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Zimbabwe, including currency volatility, the commodity price boom and protectionist policies.

The Zimbabwe Country Risk Report by BMI Research includes three major sections: Economic Outlook, Political Outlook and Operational Risk.

Economic Outlook:

How will the Zimbabwe' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Zimbabwe through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Zimbabwe Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Zimbabwe and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Zimbabwe, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Zimbabwe over the next 5-years?

BMI's Zimbabwe country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Zimbabwe Market - Political Strengths, Weaknesses, Opportunities and Threats facing Zimbabwe.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Zimbabwe's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Zimbabwe’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Zimbabwe's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Zimbabwe?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Zimbabwe against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Zimbabwe’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express