Zimbabwe Country Risk Report Q2 2016
Growing signs of internal divisions in the ruling ZANU-PF adds toexisting uncertainty over the future of politics in Zimbabwe once91-year-old President Robert Mugabe retires or dies. Against thisbackdrop, a worsening economic climate will put added pressureon government stability.
The deflationary conditions that Zimbabwe has been experiencingfor the past two years will persist through 2016 due to subdued domesticdemand, a weak South African rand and weak internationalcommodity prices.
Political and policy uncertainty will continue to deter much-neededinvestment into the moribund Zimbabwean economy, while a weakharvest, depreciating South African rand and lower commodity priceswill also weigh on short-term economic activity.
We estimate the Zimbabwean economy slipped into recession in2015 driven by a crippling drought, weak demand for key mineralexports (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 todomestic and external headwinds.
Major Forecast Changes
No major forecasts changes.
- Executive Summary
- Core Views
- Major Forecast Changes
- Key Risks
- Chapter 1: Economic Outlook
- SWOT Analysis
- BMI Economic Risk Index
- Economic Growth Outlook
- Economy Stuck In The Doldrums
- Economic growth in Zimbabwe will barely creep above zero in 2016 as the effects of drought, low commodity prices and weak levels of
- foreign investment keep the economy in the doldrums.
- GDP By Expenditure Outlook
- TABLE: 10-YEAR ECONOMIC GROWTH FORECASTS
- TABLE: PRIVATE CONSUMPTION FORECASTS
- TABLE: GOVERNMENT CONSUMPTION FORECASTS
- TABLE: GROSS FIXED CAPITAL FORMATION FORECASTS
- TABLE: NET EXPORTS FORECASTS
- Monetary Policy
- Deflationary Conditions To Remain In 2016
- 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.
- Monetary Policy Framework
- Fiscal And Debt Outlook
- Little Near-Term Growth Triggers
- Zimbabwe's 2016 budget will offer little economic stimulus to reignite growth given near-term spending constraints, limited domestic
- revenue generating capacity and a lack of access to international capital markets. If a new round of promised Chinese investment
- comes to fruition, the benefits will likely be felt in the longer term.
- Structural Fiscal Position
- TABLE: MAIN REVENUE & EXPENDITURE CATEGORIES
- Currency Forecast
- ZAR: 2016 Budget To Revive Early-Year Bullish Run
- In the short term, we expect the rand’s early-year rally to be revived by a prudent 2016/17 Budget presentation, in the light of capital
- expenditure cuts and a rise in taxes. However, the rally will fizzle out as bearish fundamentals prevail.
- TABLE: BMI SOUTH AFRICA CURRENCY FORECAST
- Chapter 2: 10-Year Forecast
- The Zimbabwean Economy To 2025
- 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.
- Although the trajectory of this is difficult to predict, at this juncture we believe the economy will expand, but only at a very subdued rate
- as much-needed foreign investment will remain at bay owing to nationalistic policies of the ZANU-PF dominated government.
- TABLE: LONG-TERM MACROECONOMIC FORECASTS
- Chapter 3: Political Outlook
- SWOT Analysis
- BMI Political Risk Index
- Domestic Politics
- Factionalism To Continue Dominating Political Discourse
- Zimbabwe's succession battle will reach fever pitch in the coming quarters ahead of the 2018 general elections, leading to elevated
- levels of political instability.
- Long-Term Political Outlook
- Succession Question Prompts Heightened Instability
- Political instability in Zimbabwe will increase in the next two years, ahead of the 2018 general election. The ruling ZANU-PF party looks
- set to retain dominance although succession questions will intensify as ailing president Robert Mugabe's rule approaches its end.
- Chapter 4: Operational Risk
- SWOT Analysis
- Operational Risk Index
- Operational Risk
- TABLE: OPERATIONAL RISK
- Trade Procedures And Governance
- TABLE: SUB-SAHARAN AFRICA – TRADE PROCEDURES AND GOVERNANCE
- Vulnerability To Crime
- TABLE: IMPORT AND EXPORT DOCUMENTS
- TABLE: TRADE PROCEDURES BREAKDOWN
- Chapter 5: BMI Global Macro Outlook
- Global Macro Outlook
- Downside Risks Gather Momentum
- TABLE: GLOBAL ASSUMPTIONS
- TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
- TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
- TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
- TABLE: MACROECONOMIC DATA & FORECASTS