New Report Available: Zimbabwe Business Forecast Report Q4 2013

From: Fast Market Research, Inc.
Published: Wed Oct 09 2013

Core Views

Zimbabweans are waiting for the new Zimbabwe African National Union - Patriotic Front (ZANU-PF) government to be sworn in and to begin the task of governing the country. The first key area of focus will be President Robert Mugabe's appointments to key cabinet positions, as these will be the first indication of the administration's priorities. Although at this juncture it appears unlikely that ZANU-PF will abandon the fierce nationalism that characterised its electoral campaign, we believe there are several reasons why the party might moderate its tone.

The performance of the Zimbabwean economy will remain inextricably linked to the policy and political climate over the coming years. Although the trajectory is difficult to predict, we believe the economy will expand at a very subdued rate. Indeed, much-needed foreign investment will remain at bay owing to the nationalistic policies of the ZANU-PF dominated government.

Full Report Details at

Although some observers have expressed concern that ZANU-PF will reintroduce a local currency following its election victory and that this will lead to the return of hyperinflation, we believe that a return to a local currency is extremely unlikely for the foreseeable future. Instead, we believe that the existing multi-currency regime will remain in place and that continued liquidity constraints will keep inflation in the 1-2% region in the short-to-medium term.

Major Forecast Changes

We have downgraded our growth forecasts for the Zimbabwean economy for the next few years following ZANU-PF's landslide election victory, as we believe that the investment and net exports components of GDP will be particularly negatively affected. Private and public consumption growth will be strong enough to keep the economy expanding, but we do not think growth rates higher than 3.5% will be achievable unless the policy environment improves significantly.

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 very 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 that have had a devastating impact on the important agricultural sector, and there is always a risk of a recurrence of poor

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