Growing signs of internal divisions in the ruling ZANU-PF adds to existing uncertainty over the future of politics in Zimbabwe once 91-year-old President Robert Mugabe retires or dies. Against this backdrop, a worsening economic climate will put added pressure on government stability.
Political and policy uncertainty will continue to deter much-needed investment into the moribund Zimbabwean economy, while a weak harvest, depreciating South African rand, and lower commodity prices will also weigh on short-term economic activity.
The Zimbabwean economy will remain near deflationary territory over the coming quarters thanks to weak demand, a depreciating South African rand, and lower oil prices.
Major Forecast Changes:
We forecast real GDP in Zimbabwe to reach 1.1% in 2016, following a slip into recession in 2015 at -0.9%. This marks a downward revision of our earlier forecast of 2.4% and 2.8% for 2015 and 2016 respectively.
Key Risks To Outlook:
The political environment presents the most salient risk to our outlook for the Zimbabwean economy. If ZANU-PF successfully re-engages with the international community and unlocks financing, our forecasts will be rendered too pessimistic. However, if political in-fighting leads to more hard-line tendencies it could squeeze the economy further.
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.
|Nominal GDP, USDbn||13.6||13.8||14.3||15.1||16.4||18.0||19.8||21.9||24.1||26.6|
|Real GDP growth, % y-o-y||-0.9||1.1||1.7||2.4||4.3||5.2||4.7||4.7||4.7||4.7|
|GDP per capita, USD||906||890||897||927||977||1,051||1,135||1,228||1,330||1,441|
|Consumer price inflation, % y-o-y, ave||-2.1||-1.3||0.4||2.0||2.0||3.0||4.0||4.0||4.0||4.0|
|Current account balance, % of GDP||-26.6||-26.4||-26.2||-25.4||-24.2||-22.7||-21.2||-19.9||-18.6||-17.4|
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.
- 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.
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:
- 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.
- 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.
- 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.
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.
- 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.
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.