Boston, MA -- (SBWIRE) -- 12/20/2013 -- Although there have been some signs, since the new government was sworn in, that the authorities will moderate the nationalism that characterised the ruling party's campaign, we believe that more will need to be done in order to assuage the concerns of investors. We are therefore forecasting relatively low growth of 3.4% in 2014 and around the same level for the years thereafter.

Finance Minister Patrick Chinamasa's decision to delay delivering the budget illustrates that he is struggling to meet the Zimbabwean government's spending requirements from extremely limited fiscal resources. In order to access multilateral financing, the government will need to convince Western governments that it is committed to reform. Other financing options include tapping emerging market partners, who will look for resources and commercial opportunities as compensation, or reintroducing a domestic currency that would almost certainly lead to high inflation and macroeconomic instability.

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Major Forecast changes

No major forecast changes

Key risks to outlook

The political environment presents the most salient risk to our outlook for the Zimbabwean economy. If ZANU-PF moderates its nationalistic stance, our forecasts will be rendered too pessimistic. However, if the party is even more aggressive in its efforts to indigenise the economy than we currently anticipate, GDP growth could well turn negative.

Premature abandonment of the foreign currency regime would likely have a negative impact on the economy.

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