Country Report Zimbabwe April 2011

Highlights

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.

Outlook for 2011-12: Political stability

Political uncertainty is set to rise substantially in 2011-12 in the run-up to and the aftermath of elections. Relations between the two main parties in the country's power-sharing government, Robert Mugabe's Zimbabwe African National Union-Patriotic Front (ZANU-PF) and Morgan Tsvangirai's Movement for Democratic Change (MDC), are extremely poor, with rumours that key MDC cabinet ministers-including Mr Tsvangirai-have been threatened with arrest, and there has been little progress towards implementing the conditions of the Global Political Agreement (GPA) signed in September 2008. There is also speculation that Mr Mugabe himself is effectively being sidelined, and that the military has usurped the political powers of the government of national unity (GNU). A third force within government-if it does in fact exist-would do little to increase stability in a situation in which there are already tensions both within and between the MDC and ZANU-PF. Moreover, tensions will clearly increase in the run-up to the polls. Political stability is likely to be undermined if there is another ZANU-PF victory in disputed circumstances, or if there is a "third force", since it is questionable whether the latter would accept an MDC victory.

Outlook for 2011-12: Election watch

The MDC and Mr Tsvangirai, as prime minister, insist that no elections can be held until a new constitution is in place, "along with appropriate electoral safeguards". This process is likely to take most of the rest of 2011: the parliamentary committee responsible for drawing up the draft admitted in March that it will not be possible to hold a constitutional referendum before September. Given that, according to the GPA, this must be followed by a constituency delimitation exercise and the re-registration of voters, polls probably cannot be held under a new constitution until mid-2012. This strategy is favoured by some members of ZANU-PF, who believe that the MDC is steadily losing popular support. It is still possible that Mr Mugabe will decide to hold elections under the existing constitution, possibly in the hope that the MDC will not participate-although this would be a high-risk strategy, given that such elections would probably be unacceptable to the international community. At present the most likely option is that elections will be held in the first half of 2012, but they could take place this year if rumours that Mr Mugabe's health is deteriorating prove to be correct, the ruling party decides that this would be to its electoral advantage, or Mr Tsvangirai and the MDC quit the coalition, voluntarily or otherwise. Whatever the exact timetable, instability and political risk are likely to increase in the run-up to and the aftermath of the polls: ZANU-PF has used violence and intimidation, as well as electoral manipulation, to win previous ballots, and there are few signs that the next election will be substantially different.

Outlook for 2011-12: International relations

Mr Mugabe continues to take an antagonistic approach towards Western states, threatening to nationalise companies based in Western countries that have imposed sanctions against Zimbabwe. If, as seems likely, there are serious concerns about the conduct of the next elections, sanctions may well remain, but a new ZANU-PF government would increasingly turn its attention to Asia for trade and aid.

The MDC will continue to turn to regional powers to influence Mr Mugabe, but this strategy is appearing increasingly ineffectual. Leaders of the Southern African Development Community (SADC), with a wary eye on the "Arab Spring" in North Africa, are unlikely to be keen to back a populist like Morgan Tsvangirai against a "liberation hero" like Robert Mugabe, and even if they were, it is far from clear what the SADC could do to enforce its recommendations. Sanctions (let alone armed intervention) are not on the agenda while Mr Mugabe still commands support among other members of the African Union, and although the SADC has expressed doubts about the viability of holding elections in 2011, it has on previous occasions given qualified support to ZANU-PF poll victories.

Outlook for 2011-12: Policy trends

Economic policy will continue to be driven by political considerations, with the proximity of elections overshadowing policy reform. However, there is also likely to be a continuing struggle for influence both between ZANU-PF and MDC ministers, and between rival economic ministries that are controlled by the MDC; this will add to the confusion over Zimbabwean economic policymaking and risks reinforcing the perception in some areas that the MDC is simply not up to the task of running the economy. The IMF has called on the government to entrench property rights, improve labour market flexibility and reform the banking sector as part of a move towards a staff-monitored programme. However, broader reforms-including further restructuring of the Reserve Bank of Zimbabwe (RBZ, the central bank), the enforcement of minimum equity capital requirements and, crucially, attempts to restrain public-sector pay-are unlikely to be implemented in the run-up to elections, since they would be politically controversial. After the polls, much will depend on the make-up of the new administration. If the MDC secures power, a large increase in donor support can be expected and the IMF will help to shape a prudent economic policy. If, however, the polls are violent, or if ZANU-PF continues to dominate, there is unlikely to be substantial progress with reform.

Outlook for 2011-12: Fiscal policy

Fiscal policy will remain a source of conflict both within the MDC and between the MDC and ZANU-PF. Tax revenue is running well short of budget, according to the MDC minister of finance, Tendai Biti, in part because of the "non-receipt" of diamond revenue. Mr Biti is keen to use such revenue to lower the budget deficit, but prior to the elections diamond-funded expenditure will increasingly shift to consumption spending, notably wages, with public-sector pay due to be reviewed in June. While officially running a balanced budget, the government is actually running a deficit of almost 4.5% of GDP, which will need to be funded by loans from non-traditional sources such as China (as well as portions of diamond sales). Concerns about the transparency of official data on the public finances will persist. The extent of off-budget expenditure is difficult to quantify, and the quality of data relating to government spending in particular is in doubt.

Outlook for 2011-12: Monetary policy

Severe foreign-exchange shortages have shaped monetary policy in recent years, undermining all economic activity. The effective dollarisation recognised in 2009 added a new dimension to this, with monetary policy rendered even less effective. It is possible that a new administration dominated by ZANU-PF would return to previous monetary policies, despite their damaging economic impact. Bank lending rates have fallen sharply with the decline in inflation, but the pace of the slowdown is likely to moderate given liquidity issues and continuing problems in the banking sector.

Outlook for 2011-12: International assumptions

International assumptions summary
(% unless otherwise indicated)
 2009201020112012
Real GDP growth
World-0.84.84.24.2
OECD-3.52.92.42.3
EU27-4.21.81.71.8
Exchange rates
¥:US$93.787.981.581.0
US$:€1.3931.3261.3081.250
SDR:US$0.6460.6520.6450.655
Financial indicators
€ 3-month interbank rate1.230.841.331.88
US$ 3-month Libor0.690.340.430.79
Commodity prices
Oil (Brent; US$/b)61.979.6101.085.0
Gold (US$/troy oz)973.01,224.71,336.31,232.5
Platinum (US$/oz)1,204.81,613.01,757.51,637.5
Food, feedstuffs & beverages (% change in US$ terms)-20.411.728.9-11.4
Industrial raw materials (% change in US$ terms)49.612.8-3.1-12.8
Note. Regional GDP growth rates weighted using purchasing power parity exchange rates.

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Outlook for 2011-12: Economic growth

After a prolonged period of collapse the economy started to recover in 2009-10, albeit from a low base: although data vary widely, it is generally estimated that Zimbabwean GDP shrank by more than 40% between 1998 and 2009. However, most fresh investment is taking place in the mining sector-which is driven by commodity prices-while growth in 2011 is likely to be affected negatively by business and political uncertainty and supply-side constraints, notably power shortages and the scarcity and cost of bank credit. Business confidence is being damaged by the sense of governmental drift, uncertainty over the likely election timetable and continued confusion about legislation requiring 51% local ownership of all enterprises. A good cropping season will help to underpin growth, but structural problems in the core agricultural sector remain, and overall growth is likely to moderate to around 3.3% in 2011. Prospects are likely to be substantially gloomier if elections are held this year. The government's willingness to pursue policy reforms will lessen in the run-up to polls, while political and business uncertainty will increase. Growth could be much lower, or even negative, if the election process proves violent.

Growth prospects for 2012 will largely be determined by the conduct and outcome of any elections. In a best-case scenario polls would be conducted under international supervision and would reflect the will of the people-which would most probably equate to an MDC victory. This would open the way for substantial foreign aid and more business-friendly economic policy, thus fuelling more rapid economic growth. At the other end of the spectrum, elections that are-or are perceived to be-neither free nor fair would depress business and investor sentiment still further (outside site-specific sectors such as mining), and could push Zimbabwe back into recession.

Outlook for 2011-12: Inflation

According to official data, inflation slowed to 3% (year on year) in February, down from 3.5% the previous month. However, these figures almost certainly understate the rate of price rises. Inflationary pressures are set to increase strongly in 2011 because of rising food and fuel prices and increasing wage demands (a number of 30% pay deals have been awarded-and backdated to mid-2010-in recent weeks, and a further pay review is promised in mid-2011). As a result, average inflation will rise to 5.4% in 2011 before accelerating to 9% in 2012 as the authorities boost spending in the run-up to polls. However, inflation should remain low by historical standards, provided that the government does not revert to the disastrous policies used previously, such as printing money to finance deficits.

Outlook for 2011-12: Exchange rates

The exchange-rate regime is likely to become an increasingly contentious political issue. Full dollarisation, with the US dollar as sole legal tender, is probably the simplest option, but as the differential between inflation rates in the US and Zimbabwe widens, businesses will question Zimbabwe's ability to operate effectively with the US dollar as its currency, particularly as much of the country's trade is with its Southern African neighbours. Meanwhile, both Mr Mugabe and Gideon Gono, the governor of the RBZ, have called for a return to the Zimbabwe dollar. Should ZANU-PF come out on top in elections, renewed use of the currency-which contributed to the country's disastrous inflation rates-cannot be ruled out.

Outlook for 2011-12: External sector

Ferro-alloys, platinum, gold and tobacco will continue to dominate export earnings, while diamonds could become an important source if the current confusion over Kimberley Process authorisation for regular auctions is resolved in Zimbabwe's favour. The strong performance of the tobacco sector in the 2010 season is likely to encourage farmers to seek to boost output in 2011-12, although agricultural growth will be partly dependent on climatic conditions, while expansion of the mining sector will be influenced by international mineral prices, the government's approach to international investment-specifically, mandated levels of local ownership-and the success of attempts to boost power supply. Such problems are unlikely to be resolved in the near term and, given the long lead time of 3-5 years to bring major mining projects on line, will act as a constraint on export volumes over the medium term. Rising import demand, meanwhile, has been largely funded by increased domestic credit and higher humanitarian assistance. It is questionable whether the former is sustainable, while the latter may be affected by political developments-particularly if the election process becomes violent.

Since tourism will recover only slowly-tourist arrivals increased by 11% in 2010, but this was relatively disappointing given attempts to capitalise on the holding of the football World Cup in neighbouring South Africa-the Economist Intelligence Unit expects the services account to remain in deficit in 2011-12. The income account is also set to remain in deficit, even though the repatriation of profits and debt-service payments will be limited. Only the current transfers account will be in surplus, owing to continued remittances by the 3.5m-plus Zimbabweans living abroad. The current-account deficit as a percentage of GDP is set to shrink sharply in 2011, to 18.2%, owing largely to the impact on exports of the start-up or expansion of a number of mining projects, before expanding again in 2012, to 37.7%, as export growth is hit by political and business uncertainty in the wake of elections.

Outlook for 2011-12: Forecast summary

Forecast summary
(% unless otherwise indicated)
 2009a2010a2011b2012b
Real GDP growth-1.34.83.32.4
Manufacturing production growth-3.86.05.7-10.7
Gross agricultural production growth-4.011.04.02.0
Consumer price inflation (av)4.5E+163.75.49.0
Consumer price inflation (end-period)5.0E+015.97.59.2
Short-term interbank rate352.041.036.025.0
Government balance (% of GDP)-6.3-4.8-4.4-4.4
Exports of goods fob (US$ bn)1.62.22.72.5
Imports of goods fob (US$ bn)3.13.73.94.1
Current-account balance (US$ bn)-1.1-0.8-0.3-0.8
Current-account balance (% of GDP)-85.2-52.8-18.2-37.7
External debt (year-end; US$ bn)5.9c6.06.26.4
a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts. c Actual.

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The political scene: An MDC member is re-elected as parliamentary speaker

Relations between the two main members of the government of national unity (GNU)-Robert Mugabe's Zimbabwe African National Union-Patriotic Front (ZANU-PF) and Morgan Tsvangirai's Movement for Democratic Change (MDC)-appear to be reaching new lows amid tensions over the election of a parliamentary speaker. In mid-March the Supreme Court nullified the election of the existing speaker, Lovemore Moyo (an MDC member), alleging that the vote in 2008 did not follow proper procedures. This sparked an angry reaction from Mr Tsvangirai, and understandable speculation that ZANU-PF was chiefly interested in installing a Mugabe loyalist in the run-up to elections. This tactic did not succeed, however: in an election at the end of March, Lovemore Moyo was re-elected as speaker with 105 votes, defeating the ZANU-PF candidate, Simon Khaya Moyo, who secured 93 votes. Given that the mainstream MDC and its MDC-N offshoot, led by Welshman Ncube, have a combined total of 103 members of parliament (MPs), this would suggest that two ZANU-PF MPs voted for Lovemore Moyo.

ZANU-PF officials are reportedly investigating the identity of "dissident" MPs, but MDC officials are under more obvious threat. According to reports in the state and other media, both Mr Tsvangirai and Lovemore Moyo are at risk of arrest on charges of contempt of court by the Mugabe-appointed attorney-general, Johannes Tomana. Indeed, a South African newspaper, Sunday Independent, reported on March 27th that Mr Tsvangirai had made a private visit to South Africa to seek the intervention of that country's president, Jacob Zuma, to prevent his arrest. These reports, combined with the arrest of the MDC minister for energy, Elton Mangoma (on allegations of corruption arising from the award of petrol procurement contracts), and suggestions that the minister for home affairs, Theresa Makone, is in hiding, have prompted suggestions that with global attention focussed on North Africa, ZANU-PF hardliners are mounting a coup against their putative coalition partners.

The political scene: There are rumours of a "third force" in government

Mr Tsvangirai himself cites a "coterie" including Emmerson Mnangagwa (the ZANU-PF minister of defence and Mr Mugabe's heir apparent), Jonathan Moyo, (a former ZANU-PF information minister) and senior members of the police, military and Central Intelligence Organisation (CIO), claiming that these constitute a "third force" within government that "acts with impunity". Some independent political analysts concur. For example, Wilf Mbanga, the UK-based editor of The Zimbabwean, believes that the GNU survives only as a means of providing social services such as health and education, with its political powers "usurped by the military many months ago". However, the idea that Mr Mugabe is being increasingly sidelined by the military junta surrounding him, and that he is no longer in control of the situation, does not seem to be borne out by the president's public appearances, where he appears articulate, rational and fully in control of the facts. Mr Mugabe is adept at manipulating his opponents (and his supporters), and is probably happy to see his "enemies" reach the wrong conclusions.

The political scene: SADC governments are critical--but ineffectual

At its March 31st meeting in Livingstone, Zambia, the Southern African Development Community (SADC) Troika on State Security-comprising the governments of Zambia, Mozambique and South Africa-came out strongly against Mr Mugabe, telling the president to end his clampdown on human-rights groups and the political opposition. Some reports suggest that, informally, he was advised to retire, and that his general state of health was poor. Again, however, it remains to be seen whether this is anything more than wishful thinking by independent journalists or even SADC governments. However, the SADC statement is unlikely to have much, if any, impact unless the governments are prepared to back up words with actions-and there has been no sign of that.

Economic policy: The government publishes mining indigenisation rules

On March 25th the government formally gazetted its Indigenisation and Economic Empowerment Regulations for the mining industry. These stipulate that every mining company that is not already majority-owned by indigenous (black) Zimbabweans must submit an indigenisation implementation plan by May 9th, and that the disposal of shares must be completed by September 25th. The new regulations change both the timetable and scope of mining-sector indigenisation: previously, the indications were that companies with a net asset value of less than US$500,000 were exempt from the indigenisation legislation, which will now apply to all mining firms with a net asset value of more than US$1, while the disposal of shares had to be accomplished within five years of the regulations' publication. In addition, there isn't any reference in the gazette to "empowerment credits" obtained through social investment by mining houses in schools, clinics or infrastructure, although there is a provision in the regulations for employee share-ownership schemes. Government officials say that more than 900 firms are required to sell 51% of their shares but virtually none have yet done so, although a sizeable number have put forward plans to "indigenise" their businesses over a five-year period-not surprising, given that was the limit previously set.

There are also a number of question marks over remuneration. The gazette states that the shares will be paid for-although it does not specify how-while they will be valued on a basis to be agreed between the indigenisation minister, Saviour Kasukuwere, and the mining company concerned. This valuation will take account of "the state's sovereign ownership of the minerals to be exploited"-an apparent attempt to reduce the amount that will have to be paid for the shares. However, the so-called designated entities that will buy the shares are under no apparent commitment to pay for them by September 25th.

Economic policy: Alluvial miners are excluded from nationalisation

Addressing a poorly timed investment conference in the capital, Harare, in March, Mr Kasukuwere said that the government would set up a sovereign wealth fund to hold controlling stakes in all mining companies, and that this would be funded from mining exports, although it was not clear whether he meant that this revenue would be used to pay for the mining company's shares. Since the government is technically insolvent, estimated to owe nearly US$6bn to foreign creditors as well as US$100m to local suppliers, there is little credibility to his pledge that the shares will be paid for. He also backtracked on earlier suggestions by the finance minister that alluvial diamond miners would be nationalised. The five firms mining diamonds in Chiadzwa-Marange include: Anjin Zimbabwe, which is run by Chinese interests; Mbada Diamonds, which is owned by a Mugabe ally; and another operation that is run by the Zimbabwe National Army. It is hardly surprising, therefore, that they should be excluded from nationalisation, although the decision does underscore the party-political nature of the legislation. In this environment, the publication of the new regulations is certain to lead to considerable debate, and Mr Mugabe and ZANU-PF can be expected to show increasing impatience with companies that appear to the authorities to be trying to undermine the indigenisation process. This increasing antagonism, combined with inevitable delays in resolving outstanding indigenisation issues, threatens to slow levels of activity in the mining sector.

Economic policy: Implats under pressure

Illustrating the pressures facing mining companies, Zimbabwe Platinum (Zimplats), owned by South Africa-based Implats, is facing mounting demands from various Zimbabwean empowerment groups. Two traditional chiefs are seeking a 10% stake in the company, to be owned by a community trust, while the state-owned National Indigenization and Economic Empowerment Board is also demanding a 10% stake. The chiefs say they want Implats to apply the same principle as in South Africa, where Royal Bafokeng Holdings-a group controlled by the Bafokeng community-owns 13% of Implats.

Economic policy: The US threatens a blacklist of diamond companies

Meanwhile the US is threatening to blacklist international companies that deal in Zimbabwean diamonds, despite the Kimberley Process apparently approving the sale of the gems (Economic policy, March 2011). The new chairman of the Kimberley Process, Mathieu Yamba, was quoted on Rapaport Diamond Trading Network's website as saying that Zimbabwe's diamond sales should go ahead pending "an administrative decision", and that exports from the mining operations of Mbada and Canadile-two of the five companies operating in the controversial Chiadzwa-Marange diamond fields-are "authorised to resume". However, Mbada and Canadile are already on an international sanctions list, while the World Diamond Council has advised members to refrain from trading in Zimbabwean gems until the situation is "clarified".

Economic performance: Essar buys a stake in Zisco

After months of negotiations the government and Essar African Holdings-based in Mauritius but Indian-owned-have signed a contract for the sale of the state-owned Zimbabwe Iron and Steel Company (Zisco). Essar will take a 54% shareholding in Zisco, while the government will retain 35% and minority shareholders their existing 11% stake. Essar says it hopes to resume steel production by mid-2012. According to the industry minister, Welshman Ncube, Essar will take over the government's US$340m debt obligations to Zisco and will complete the re-lining of the blast furnaces and coke oven batteries, involving an investment of US$750m in the first year.

Zisco is the only fully fledged Sub-Saharan steel producer outside South Africa, but has long suffered operational problems, particularly following the collapse of a much-publicised US$400m investment by India's Global Steel Holdings (which prompted allegations of asset "looting" by ZANU-PF). Its plant at Kwekwe has an annual capacity of almost 1m tonnes of steel, but persistent problems with deliveries of coking coal, load-shedding and breakdowns at its blast furnaces mean that production has effectively halted. The government has been seeking a strategic partner for some time: in the wake of the failed Global Steel Holdings investment the authorities announced that the Metallurgical Corporation of China had offered US$3bn for a 60% stake in the company, although this investment failed to materialise. According to Mr Ncube, in due-diligence exercises most potential buyers valued Zisco at only US$45m-underscoring the extent of the deterioration. Certainly, substantial investment is going to be required. Essar Africa's vice-chairman, Ravi Ruia, said that his firm will have to put in place "coal, uninterrupted electricity supplies, transport and logistics" in order to re-open the steel mill. In a second phase, Essar will also rehabilitate the rail link between Zisco, based in the central town of Redcliff, and Hwange Colliery in western Zimbabwe.

Economic performance: A loan from China is agreed

In late March a US$700m Chinese loan was announced-the country's largest loan package since the signing of the Global Political Agreement in 2008. The loans awarded by China's Export-Import Bank include: US$342m for agricultural equipment and machinery; US$99.5m for health equipment and supplies; and US$144m for the renovation of Harare's water and sewerage system. China is also providing US$102m to the central government and two grants worth US$14 million. The Chinese authorities describe the loan as humanitarian, but there is little doubt about Chinese hopes for a quid pro quo: in announcing the agreement, the Chinese vice-premier, Wang Qishan, expressed his hope that "Zimbabwe will protect the legitimate right of Chinese businesses in the country." This would appear to have already affected government policymaking, with Saviour Kasukuwere's announcement that alluvial diamond miners-including the Chinese-run Anjin Zimbabwe-would not after all be nationalised. It remains to be seen whether Chinese miners will be exempted from the latest indigenisation requirements-or perhaps on what grounds they will be excluded, since it seems highly unlikely that they will face expropriation.

The Chinese loan makes obvious economic and political sense for Mr Mugabe, since it appears to come without any of the conditionalities that would be imposed by Western donors. However, opponents argue that the government is selling the country's mineral wealth for short-term political gain. It certainly seems likely that the funds will be used to bolster ZANU-PF's electoral prospects, possibly by part-funding wage increases or boosting food supplies. The latter is becoming an increasingly pressing issue, with the Ministry of Agriculture admitting that six of the country's nine provinces face critical food shortages. Only the three Mashonaland provinces in the north-east have received adequate rainfall this season, leading to forecasts that the country will need to import a minimum of US$300m to meet food requirements-hardly an ideal pre-election situation.

Economic performance: IDC agrees a US$30m facility for Agribank

In a further boost for the agricultural sector, the Industrial Development Corporation (IDC) of South Africa has signed a US$30m facility agreement with Agricultural Bank of Zimbabwe (Agribank), the first transaction of its kind since the two countries signed the Bilateral Investment Promotion and Protection Act in 2010. Agribank says it will use the six-year facility to on-lend to its clients, with the bulk of the money going to firms in the agri-business, manufacturing, and mining sectors, while US$10m has been allocated to the Industrial Development Corporation of Zimbabwe. However, the loan has been structured to ensure that a large portion of the funding will be used by Zimbabwean companies to purchase South African goods and services.

Data and charts: Annual data and forecast

 2006a2007b2008b2009b2010b2011c2012c
GDP       
Nominal GDP (US$ bn)1.81.71.51.31.61.92.1
Nominal GDP (Z$ bn)9.01E+021.08E+051.38E+136.05E+276.62E+277.21E+278.04E+27
Real GDP growth (%)-1.6-5.5-14.2-1.34.83.32.4
Expenditure on GDP (% real change)       
Private consumption-4.5-5.0-13.9-1.03.53.13.3
Government consumption-6.0-6.0-10.05.06.45.05.4
Gross fixed investment-1.0-5.0-8.0-2.06.63.42.9
Exports of goods & services-1.0-0.8-1.2-0.53.33.83.5
Imports of goods & services-1.5-1.0-0.61.53.04.05.2
Origin of GDP (% real change)       
Agriculture-4.5-5.0-24.0-4.011.04.02.0
Industry-3.5-5.0-14.7-2.08.84.53.5
Services-5.0b-5.8-11.0-0.34.52.82.0
Population and income       
Population (m)12.5b12.512.512.512.612.612.6
GDP per head (US$ at PPP)188b183160159169177186
Fiscal indicators (% of GDP)       
Public-sector revenue38.837.138.939.538.737.736.7
Public-sector expenditure50.245.845.145.843.542.141.1
Public-sector balance-11.4-8.7-6.2-6.3-4.8-4.4-4.4
Net public debt205.9b219.1247.0282.6241.5206.6184.3
Prices and financial indicators       
Exchange rate Z$:US$ (end-period)d2.50E+023.23E+05a6.75E+161.72E+355.00E+383.00E+273.00E+27
Consumer prices (end-period; %)1.28E+036.62E+04a2.16E+235.00E+015.90E+007.50E+009.20E+00
Stock of money M1 (% change)1.32E+036.67E+042.88E+094.47E+168.36E+018.38E+018.64E+01
Stock of money M2 (% change)1.45E+036.04E+043.17E+094.47E+169.84E+011.01E+021.07E+02
Lending interest rate (av; %)496.5579.0a546.0352.041.036.025.0
Current account (US$ m)       
Trade balance-651b-542-611-1,529-1,428-1,165-1,625
 Goods: exports fob1,502b1,4321,3031,6102,2452,6912,500
 Goods: imports fob-2,153b-1,975-1,914-3,139-3,673-3,856-4,125
Services balance-88b-108-146-130-202-249-259
Income balance-151b-144-189-198-180-156-143
Current transfers balance264b2662707209711,2221,224
Current-account balance-626b-528-676-1,137-839-348-803
External debt (US$ m)       
Debt stock4,6515,292a5,199a5,891a6,0276,2276,367
Debt service paid8580a29a58536670
 Principal repayments3339a8a36a253635
 Interest5341a21a22283136
Debt service due438445a230a777358361488
International reserves (US$ m)       
Total international reserves139b11796351376462464
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts. d The currency re-denominations carried out in 2008 and 2009 have not been applied in order to give a consistent data series.
Source: IMF, International Financial Statistics.

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Data and charts: Quarterly data

 2006  2007   2008
 2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr
Central government finance (Z$ m)        
Revenue & grants162,579n/an/an/an/an/an/an/a
Expenditure & net lending188,148n/an/an/an/an/an/an/a
Balance-25,569n/an/an/an/an/an/an/a
Total domestic debt (end-period)46,213119,401175,6661,283,404n/an/an/an/a
Output        
Manufacturing index (1990=100)586973n/an/an/an/an/a
Manufacturing index (% change, year on year)-51230n/an/an/an/an/a
Prices        
Consumer prices (2000=100)133,258249,903509,9531,437,2647,321,732n/an/an/a
Consumer prices (% change, year on year)1,1471,0711,1641,8835,394n/an/an/a
Financial indicators        
Exchange rate Z$:US$ (av)100.7200.0259.2259.2257.38,186.730,00030,000
Exchange rate Z$:US$ (end-period)104.8259.6258.9259.1255.630,000.030,00030,000
Parallel exchange rate Z$:US$ (av)320.01,068.02,56710,33379,333293,333n/an/a
Bank rate (end-period; %)850.0300.0500.0500.0600.0600.0975.0n/a
Lending rate (av; %)665.8431.7400.0529.2537.5590.8658.3n/a
Treasury bill rate (av;%)509.4258.866.366.3248.8340.0340.0n/a
M1 (end-period; Z$ bn)1.15E+053.32E+056.37E+052.22E+061.89E+077.09E+074.25E+088.05E+08
M1 (% change, year on year)7711,5101,3233,58416,32421,255.866,709.936,096.3
M2 (end-period; Z$ bn)1.58E+054.34E+059.07E+052.85E+062.36E+079.07E+075.49E+081.72E+09
M2 (% change, year on year)7811,5201,4533,37214,84020,807.860,376.260,197.1
ZSE Industrial index (end-period)61,764184,839310,459548,7303,696,2865,460,688n/an/a
Sectoral trends        
Tobacco auctions (annual totals; '000 tonnes)a53n/an/an/an/an/an/an/a
Gold production (kg)2,5562,9902,9042,334n/an/an/an/a
Gold production (Z$ bn)6,28613,03529,56927,735n/an/an/an/a
Chrome ore production ('000 tonnes)173177176176n/an/an/an/a
Chrome ore production (Z$ bn)1,6624,0198,54119,643n/an/an/an/a
Platinum production (kg)1,1831,4341,2101,367n/an/an/an/a
Platinum production (Z$ bn)4,01610,40010,37711,761n/an/an/an/a
Foreign trade (Z$ m)b        
Exports fob236.0243.3254.4620.5711.0550.8620.9588.8
Imports cif709.9786.1729.7627.2593.2656.7804.3640.9
Trade balance-473.9-542.8-475.3-6.7117.8-105.9-183.4-52.1
a Provisional data for 2006. b DOTS estimates.
Sources: IMF, International Financial Statistics; Direction of Trade Statistics; Reserve Bank of Zimbabwe; Central Statistical Office.

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Data and charts: Monthly data

 JanFebMarAprMayJunJulAugSepOctNovDec
Exchange rate Z$:US$ (av)
20055.86.06.16.17.19.812.521.225.561.564.278.0
200693.799.299.299.2101.2101.2101.2250.0250.0250.0250.0250.0
2007250.0250.0250.015,00015,00015,00015,00015,00030,000n/an/an/a
M1 (% change, year on year)
2005156196189187191180237236264423407553
20065985465215796887718671,3001,5101,3021,4421,323
20071,6072,1143,5844,8448,92816,32418,44116,83721,25626,77957,53866,710
M2 (% change, year on year)
2005168204192190219202253236256377414533
20065885495595936757818531,2661,5201,4901,4621,453
20071,6682,1423,3724,5598,34414,84018,59917,84520,80823,08150,69960,376
Deposit rate (%)
200556.546.544.444.054.081.579.0126.0126.0130.5130.5174.0
2006169.0164.0229.0254.0254.0229.0284.0179.0179.0166.5166.5166.5
2007129.0124.0154.0154.0154.0129.0129.0129.094.0104.079.079.0
Lending rate (%)
2005168.0155.0155.6150.0165.0200.0207.5262.0275.0360.0315.0415.0
2006415.0455.0595.0682.5682.5632.5632.5312.5350.0350.0350.0500.0
2007512.5537.5537.5537.5537.5537.5572.5600.0600.0600.0600.0775.0
Industrial share prices (% change, year on year)
2005
2006
20071,4002,2006,1008,70018,20066,20027,60020,13322,05097,460211,588326,311
Sources: IMF, International Financial Statistics; Haver Analytics.

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Data and charts: Annual trends charts

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Data and charts: Monthly trends charts

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Data and charts: Comparative economic indicators

Please see graphic below

Basic data

Land area

390,580 sq km

Population

12.5m(a) (2009, IMF mid-year estimate)

Main towns

Population in '000, 2002 (independent estimates)

Harare (capital): 1,444

Bulawayo: 676

Chitungwiza(b): 321

Gweru: 137

Climate

Subtropical

Weather in Harare (altitude 1,472 metres)

Hottest months, October and November, 16-27°C; coldest months, June and July, 7-21°C (average daily minimum and maximum); driest month, July, 1 mm average rainfall; wettest month, January, 196 mm average rainfall

Languages

English (official), Shona, Ndebele and local dialects

Measures

Metric system

Currency

Zimbabwe dollar (Z$) = 100 cents; however, because of rampant inflation the government has moved to a multi-currency system, using the US dollar and South African rand in preference to the Zimbabwe dollar

Time

2 hours ahead of GMT

Public holidays

January 1st (New Year's Day), Good Friday, Easter Monday, April 18th (Independence Day), May 1st (Workers' Day), May 25th (Africa Day), August 11th (Heroes' Day), August 12th (Defence Forces' National Day), December 22nd (Unity Day), December 25th and 26th (Christmas Day and Boxing Day); many firms close for a summer break of one to two weeks over the Christmas and New Year period

(a) Estimates of Zimbabwe's population vary considerably depending on how they account for the impact of AIDS. The most recent census was in 2002; preliminary results show a population of 11.6m-about 2m below earlier projections. (b) Harare's former township.

Political structure

Official name

Republic of Zimbabwe

Form of state

Unitary republic

Legal system

Based on Roman-Dutch law and the 1979 constitution

National legislature

House of Assembly with 210 members, all of whom are directly elected; a Senate of 66 members (50 of whom are directly elected, six appointed by the president and ten seats held by traditional chiefs) was established in November 2005

National elections

March 2008 (presidential, legislative and Senate); next elections due in 2011

Head of state

President, elected by universal suffrage for a six-year term

National government

The president and his appointed cabinet; a power-sharing government was formed in February 2009 in accordance with an agreement signed after the disputed 2008 elections

Main political parties

Zimbabwe African National Union-Patriotic Front (ZANU-PF), the ruling party since 1980; the Movement for Democratic Change (MDC), formed by the trade union movement in September 1999; a number of smaller parties and independent candidates also contest elections

President: Robert Mugabe

Prime minister: Morgan Tsvangirai

Key ZANU-PF ministers

Agriculture, mechanisation & irrigation: Joseph Made

Defence: Emmerson Mnangagwa

Energy & water development: Kenneth Konga

Environment & natural resources management: Francis Nhema

Foreign affairs: Simbarashe Mumbengegwi

Justice & legal affairs: Patrick Chinamasa

Lands & rural resettlement: Herbert Murerwa

Media, information & publicity: Webster Shamu

Mines & minerals development: Obert Mpofu

Transport & infrastructural development: Nicholas Goche

Key MDC ministers

Economic planning & investment promotion: Tapiwa Mashakada

Education, sport, art & culture: David Coltart

Energy & power development: Elton Mangoma

Finance: Tendai Biti

Health & child welfare: Henry Madzorera

Home affairs: Theresa Makone

Housing & social amenities: Giles Mutsekwa

Industry & commerce: Welshman Ncube

Labour & social security: Paurina Gwanyanya

Public works: Joel Gabuza

Reserve Bank governor

Gideon Gono

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
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