Zimbabwe Business Forecast Report Q3 2008

Publication Date	June 2008
Publisher	Business Monitor
Product Type	Report
Pages	50
ISBN Number	1746-5818
Product Code	BMI01230

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Summary

increases ahead of Decisive Presidential election The second round of the presidential election is scheduled for June 7 008, and the Movement for Democratic Change (MDC) has said that it will participate under protest, maintaining that its leader Morgan Tsvangirai achieved 0. % of the initial vote. The current political environment does not bode well for a free and fair run-off. In our view, President Robert Mugabe has lost control of the process, which is now being dictated by the military and security chiefs, who need Mugabe to stay in power to protect themselves. It is alleged that they have launched a campaign of repression against MDC cadres, which is generating increasing concern abroad, and, according to the US ambassador, is spiralling out of control.

The outcome of the run-off can not yet be predicted. In a fair contest Tsvangarai would win, but there is a high risk that the incumbent government will intimidate voters and manipulate the ballot to achieve a narrow victory for Mugabe. The implications of a disputed run-off for political stability are extremely serious, and include Zimbabwe plunging into an even greater crisis than it is already in. In our view, one way to avoid that happening is for the June election to be monitored by credible international observers. The Southern African Development Community and the African Union have yet to overrule Mugabe's position of banning all but the most pliant of observers, but pressure is increasing on Southern African leaders to act to pre-empt a potential humanitarian catastrophe.

The economic crisis continues unabated: output will shrink in real terms by at least 6.0% in 008, roughly half of the remaining in-country population now depends on food aid from abroad, the current grain and tobacco seasons have proved disastrous, public services are intermittent at best, and domestic shortages are acute. About the only sector still exporting is mining, and it is not clear how much of its overseas sales still flow through official channels. Consumer prices are now doubling every week, driven by huge fiscal deficit spending funded by unbacked monetary emission by the central bank. Without a significant political change, we believe that there is no limit to how far inflation and currency depreciation can go.

The business environment is currently amongst the most challenging in the world. Yet in the expectation of a political solution, donors, FDI players and even portfolio investors are waiting in the wings. It will probably take 10 years or more to truly resuscitate the economy, but BMI believes that there is no shortage of erstwhile external partners prepared to contribute to the effort.

Content

Executive Summary
- Increases Ahead of Decisive Presidential Election
Chapter 1: Political Outlook
- SWOT Analysis
- Smi Political Risk Ratings
- Domestic Politics
- Approaching The Showdown
- after Much Controversy, The Delayed Run-off to Decide The Inconclusive Presidential Contest Will Now Take Place
- in Late June
List of Tables
- Table: Political Overview
- Foreign Politics
- A Serious Case of Myopia?
- Precedents Exist for Direct Intervention by Multilateral African Institutions in Countries Suffering Political Crises
Chapter 2: Economic Outlook
- SWOT Analysis
- Bmi Economic Risk Ratings
- Introduction
- Not An Enviable Position
- Economic Activity
- Economy Remains in Limbo
- The Economic Climate Will Not Improve until The Political Crisis Is Resolved. Agriculture Is Suffering Further Blows
- as The Regime and Opposition Vie for Power
List of Tables
- Table: Economic Activity
- Monetary Policy
- Rbz Remains in Denial
- The Central Bank Has Announced New Policy Measures, but They Lack Any Real Credibility and Do Not Address The
- Fundamental Problem, Which Is Deficit Spending by The Government Bankrolled by The Printing of Paper Money
List of Tables
- Table:Monetary Policy
- Exchange Rate Policy
- A Disingenuous Reform
- The Official Exchange Rate Has Been Floated and Has Subsequently Converged with The Parallel Market Price
List of Tables
- Table:Exchange Rate Policy
Chapter 3: Special Report
- Business Outlook for Global Frontier Markets
- Growing Fast on The New Frontier
- The 41 States That Bmi Examines in A New Report on Our Online Service May Make up Only A Small Slice of The World
- Economy, but They Possess Characteristics That Will See Them Gain Importance in The Eyes of Investors and Global
- Businesses over The Coming Years
List of Tables
- Table: Frontier Markets - Key Data and Projections for Top 10 Countries
- Frontier Investment
- Potential and Pitfalls
- The Spectacular Macroeconomic Performance of Frontier Markets in Recent Years Has Been Matched by Mildly
- Successful Efforts to Deepen Capital Markets
List of Tables
- Table: Gdp per Capita, US$ (in Order of % Increase)
- Table: Diversity through Frontier Markets - Correlation Coefficients January 2004-April 2008
- Table: Frontier Market Indices
- Regional Overview
- Laos
- Neighbouring Economies The Key to Growth
- Laos's Gdp Growth Has Been Boosted in Recent Years as Neighbours China, Thailand and Vietnam Compete for Its
- Natural Resources
- Yemen
- Huge Potential, but Don't Bank on Gcc Membership
- Markets Do Not Come Much More Frontier than Yemen, and, as Would Be Expected, There Is Huge Potential for
- Development, with The Prospect of Eventual Gcc Membership Likely to Act A Key Investment Pull
List of Tables
- Table: Yemen Economic Activity
- Democratic Republic of The Congo
- Mining Industry to Drive Growth
- The Democratic Republic of The Congo's Mining Industry Will Be A Key Driver of Growth and Is Likely to Attract
- Significant Levels of Fdi, with Our Real Gdp Forecasts Standing at 8.3% and 7.9% in 2008 and 2009, Respectively
List of Tables
- Table: Democratic Republic of The Congo - Economic Activity
- Cuba
- Investment Prospects after Fidel
- The Accession of A New Leadership Structure in Cuba Has Sparked Excitement That The 45-Year-Old Trade Embargo
- with The US May Be Lifted and Cuba May Move toward Market Liberalisation
List of Tables
- Table: Cuba Macroeconomic Data and Forecasts
- Mongolia
- Minerals to Drive Economic Boom
- Mongolia Is in The Midst of A Massive Resource-LED Economic Boom That Should Lift Gdp Growth into The Double
- Digits and Underpin Robust Increases in Exports and Inflows of Foreign Investment Capital over The Long Term
List of Tables
- Table: Mongolia - Economic Activity
Chapter 4: Business Environment
- SWOT Analysis
- Bmi Business Environment Risk Ratings
- Business Environment Outlook
- Institutions
List of Tables
- Table: Bmi Business & Operational Risk Ratings
- Table: Bmi Legal Framework Ratings
- Infrastructure
- Market Orientation
List of Tables
- Table: Middle East & Africa Fdi
- Table: Top Export Destinations
- Table:Bmi Trade Ratings
- Operational Risk