Zimbabwe Business Forecast Report Q2 2013 - a new country guide report on companiesandmarkets.com
PR-Inside.com: 2014-03-10 11:48:03
Following a breakthrough in a deadlock which had stalled Zimbabwes constitution-making process, we believe that the country will move rapidly towards the implementation of a new constitution and the holding of fresh elections. While we believe that the new constitution includes provisions that would improve the political environment, we reiterate that it is the extent to which stakeholders adhere to and uphold the laws which will dictate whether the country advances or regresses politically. Although an expected recovery in agricultural output means we see headline GDP growth at 4.9% in 2013, higher than the 4.6% estimated for 2012, this masks that fact that significant headwinds continue to buffet Zimbabwes economy.
A volatile political environment will hinder investment while a large import bill will also weigh on the headline number. 2013 could prove to be a watershed year for economy. If elections produce a clear result which is accepted by the loser and by the security forces, growth is likely to accelerate into the double digits in 2014. However, if the vote ends in another power-sharing agreement or descends into violence and chaos, the economy is likely to stagnate or even return to contraction. Inflation in Zimbabwe is likely to remain low over the course of 2013 thanks to low demand and a weak South African rand which will keep a lid on imported inflationary pressure.
Major Forecast Changes
No major forecast changes
Key Risks To Outlook
The political environment presents the most salient risk to our outlook for the Zimbabwean economy. If upcoming elections descend into violent chaos or if the security forces refuse to accept an MDC victory, our growth forecasts would likely be rendered too optimistic. On the other hand, if there is a quicker, more decisive resolution to ongoing political uncertainty, foreign investment would likely flow quickly into the country and would cause our forecasts to prove pessimistic. There are significant policy risks. Premature abandonment of the foreign currency regime, for instance, 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.
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