Country Report Zimbabwe September 2008

Outlook for 2008-09

• Zimbabwe's president, Robert Mugabe, is expected to cling on to power, supported by his security forces.
• Although the opposition has gained a parliamentary majority, Mr Mugabe will simply bypass parliament and rule by decree.
• Economic policy will continue to be driven by political considerations and the economy will continue to contract, at a forecast rate of 6.2% in 2008 and 4.4% in 2009.
• Hyperinflation will continue throughout the forecast period as the government continues to print money to finance its activities. This will be compounded by high global food and fuel prices.
• The recent redenomination of the currency is likely to provide only short-lived relief, as inflation continues to undermine its value.
• A rise in metal exports should push up export earnings in 2008-09. However, imports will remain high, owing both to high world oil prices and to substantial food imports.
• As a percentage of GDP, the current-account deficit will surpass 60% by 2009 because of the ongoing contraction of the economy.

Monthly review

• There has been no solution from the power-sharing talks between Mr Mugabe and the opposition leader, Morgan Tsvangirai.
• Mr Mugabe was embarrassed at the opening of parliament when members of the opposition, who hold the majority, heckled him before voting in an opposition member as speaker.
• Mr Mugabe has begun preparations to form his own government. The opposition have argued that this would be a violation of the terms of the negotiations that Mr Mugabe signed up to with regional mediators.
• The Mugabe regime has lifted its ban preventing all non-governmental agencies from distributing food aid in Zimbabwe's rural areas. Many groups have been prevented from distributing aid for five months.
• The government's redenomination of the currency, in which 10 zeros were knocked off, has done nothing to reduce inflation.
• According to the state-controlled Zimbabwe Tourism Authority, tourist numbers increased in 2007, although local experts question this assertion given the difficulties faced by travellers visiting the country.

Source: Country Report