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.
The deflationary conditions that Zimbabwe has been experiencing for the past two years will persist through 2016 due to subdued domestic demand, a weak South African rand and weak international commodity prices.
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.
We estimate that the Zimbabwean economy slipped into recession in 2015 driven by a crippling drought, weak demand for key mineral exports (ie gold and diamonds) and limited investment opportunities. We expect only a minor improvement over the coming quarters, with economic conditions set to remain highly challenging owing to both domestic and external headwinds.
Major Forecast Changes:
No major forecasts changes
The succession of President Robert Mugabe risks turning violent if plans are not put in place and set in motion prior to his departure, as competing vested interests struggle to fill the power vacuum left in his wake.
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||13.7||14.1||15.0||16.2||17.8||19.7||21.7||23.9||26.3||29.0|
|Real GDP growth, % y-o-y||0.5||1.2||2.4||4.3||5.2||4.7||4.7||4.7||4.7||4.7|
|GDP per capita, USD||885||888||918||968||1,041||1,124||1,217||1,318||1,428||1,548|
|Consumer price inflation, % y-o-y, ave||-1.3||0.4||2.0||2.0||3.0||4.0||4.0||4.0||4.0||4.0|
|Current account balance, % of GDP||-26.6||-26.4||-25.6||-24.4||-22.9||-21.4||-20.1||-18.8||-17.6||-16.4|
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