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Zimbabwe Country Risk Report Q2 2015

Zimbabwe Country Risk Report Q2 2015

Core Views

The succession process in Zimbabwe has become somewhat clearer.

The removal of Vice-President Joice Mujuru at ZANU-PF’s five-yearcongress in early December 2014 seemingly clears the path for hermain rival Emmerson Mnangagwa to take the helm once Mugabeeventually departs the scene. Even so, there remains little uncertaintyover the issue, not least given that all the power now lies within thepresident’s hands.

Political and policy uncertainty will continue to deter much-neededinvestment into the moribund Zimbabwean economy, while a depreciatingSouth African rand and weak commodity prices will alsoweigh on economic activity.

The Zimbabwean economy will remain near deflationary territoryover the coming quarters owing to weak demand, a depreciatingSouth African rand and low oil prices.

Major Forecast Changes

No major forecast changes.


Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Succession Issue Clearer, But Major Uncertainty Remains
The fall of Joice Mujuru and appointment of Emmerson Mnangagwa as presidential heir apparent gives greater clarity to Zimbabwe's
succession process. Even so, there remains little uncertainty over the issue, not least given that all the power now lies within the
president's hands.
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Mugabe's Key Challenges
Zimbabwe faces an uncertain political future following the resounding victory of President Robert Mugabe and his ZANU-PF party in
the 2013. The main policy issues are likely to be the party's drive to indigenise the economy; questions about the independence of the
judiciary and security services; and the Zimbabwean government's turbulent relationship with the West.
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Activity
Economy Still Grappling With Multiple Challenges
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.
TABLE: Economic Acti vit y
Balance Of Payments
External Account Stability Masks Negative Trend
Falling imports will continue to more than offset the impact of weaker export revenues on Zimbabwe's current account balance over the
coming quarters. Even so, we believe this trend reflects the ill health of the economy.
TABLE: Current Account
Monetary Policy
Inflation To Stay Close To Zero In 2015
The Zimbabwean economy will continue to flirt with deflation over the coming quarters owing to weak aggregate demand, a depreciating
South African rand and the impact of lower oil prices. We forecast annual inflation will remain at around zero in 2015.
TABLE: Monetar y Polic y
Banking Sector
Non-Performing Loans To Weigh On Banks' Capital
Falling capital and reserves at Zimbabwe's commercial banks are a result of the write-downs from non-performing loans. While positive
in principle, the Reserve Bank of Zimbabwe's plan to buy bad loans from banks will face financing difficulties.
Chapter 3: 10-Year Forecast
The Zimbabwean Economy To 2024
Policy Risks To Constrain Long-Term GDP Growth
The performance of the Zimbabwean economy will remain inextricably linked to the policy and political climate over the coming
years.
TABLE: Long -Term Macr oec onomic Forecasts
Chapter 4: Operational Risk
SWOT Analysis
Operational Risk Index
Operational Risk
TABLE: Operational Risk
Availability Of Labour
TABLE: Sub -Saharan Africa - Availabilit y Of Lab our
TABLE: Top Ten Migrant Source Countries
TABLE: Empl oyment by Sect or
Crime Risk
TABLE: SSA Crime Ris k
TABLE: Crime Rates
Chapter 5: BMI Global Assumptions
Global Outlook
Weaker EMs To Weigh On Growth
Table : Global Assumpti ons
Table: Developed States, Real GDP GrowtH, %
Table : BMI VERSUS BLOO MBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
Table : Emerging Mar kets , Real GDP Growt h, %

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