Country Report Zimbabwe April 2009

Summary

Having manipulated the country's power-sharing negotiations and moved towards co-opting the opposition, the president, Robert Mugabe, may now be able to hang on to power over the forecast period.
Economic policy will continue to be driven by political considerations, with the struggle for influence between the two main parties in the power-sharing government overshadowing reform.
Economic growth will continue to depend almost entirely on the extent and timing of international assistance. Without a substantive change in govern-ment the economy is forecast to contract in 2009-10.
With rapid dollarisation at the end of 2008, inflation has fallen dramatically. Prices are expected to decline further until mid-year and possibly longer, before stabilising in late 2009.
The Zimbabwe dollar no longer exists as a currency. Most transactions will be conducted in US dollars, although the government says that it will retain a multicurrency system with the South African rand as its "reference currency".
The global economic slump will reduce demand for Zimbabwe's metal exports in 2009-10, and unless there is a marked increase in foreign aid the chronic shortage of foreign currency will lead to a fall in imports.

The death of Susan Tsvangirai, the prime minister's wife, in a car accident appears to have created a more conciliatory political mood, although it is not clear whether this is anything more than a tactical shift by Robert Mugabe.
Donors are worried about co-option inand the competence ofthe new government.
The Southern African Development Community has agreed to support Zimbabwe's call for an US$8.5bn economic recovery package, but there are few signs of any strong funding commitments.
Although the government is confident that the West will not allow the unity government to collapse, the Western stance is considerably more nuanced.
The new finance minister has announced a revised 2009 budget. Although its revenue and expenditure targets are substantially more realistic than the original budget, there are doubts about their attainability.
Consumer prices fell by a cumulative 5.5% in the first two months of 2009, illustrating the impact of the effective demise of the Zimbabwe dollar.

This report covers the following industry codes:
SIC Code: 49
NAICS Code: 22