Outlook for 2011-12

• There is speculation that the president, Robert Mugabe, is being sidelined within the government of national unity (GNU) and that the military has effectively usurped the GNU's political powers.
• The existence of this "third force" is not definite, but could exacerbate existing instability caused by friction between the Movement for Democratic Change (MDC) and the Zimbabwe African National Union-Patriotic Front (ZANU-PF).
• Southern African leaders are unlikely to back a populist like the MDC leader, Morgan Tsvangirai, against a liberation "hero" such as Robert Mugabe.
• Political considerations will increasingly overshadow economic reform in the run-up to elections, although the precise electoral timetable remains unclear.
• Growth in 2011 is likely to be undermined by business and political uncertainty, while the prospects for 2012 will be largely determined by the conduct and outcome of any elections.
• Inflationary pressures are set to increase strongly in 2011-12 because of rising food and fuel prices and increasing wage demands.
• The ratio of the current-account deficit to GDP is expected to shrink sharply to 18.2% in 2011, before rising to 37.7% in 2012 as export growth is hit by political and business uncertainty in the wake of elections.

Monthly review

• Relations between ZANU-PF and the MDC appear to be reaching a new low, amid tensions over the election of a parliamentary speaker.
• At a meeting at the end of March, the Southern African Development Community Troika on State Security was critical of Mr Mugabe, telling him to end the clampdown on the opposition.
• The government has formally gazetted its indigenisation requirements for the mining industry, changing both the timetable and scope of such requirements.
• The US is threatening to blacklist international companies that deal in Zimbabwean diamonds, amid continuing confusion about the Kimberley Process's stance on sales of the gems.
• Essar African Holdings is to invest US$750m in the Zimbabwe Iron and Steel Company after buying a 54% shareholding in the struggling firm.
• China has agreed a US$700m multi-sector loan, but wants to see Chinese interests exempted from indigenisation requirements.