Morgan & Co on the main drivers for Zim’s economy in 2020
The story of Zimbabwe's economic and political turmoil is one that is stressed locally and globally, both Zimbabwe and Venezuela have similar downfalls which could be credited to unstable systems and leadership according to Morgan & Co Research. Batanai Matsika, Head of Research at Morgan & Co joins CNBC Africa to discuss Zimbabwe's economic outlook for 2020.
Wed, 29 Jan 2020 11:56:14 GMT
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- Zimbabwe faces economic challenges due to international sanctions and political instability, with a projected negative GDP growth for 2020.
- Morgan and Co's research draws parallels between Zimbabwe and Venezuela, highlighting the need for fundamental reforms to stimulate economic revival.
- Investors can consider sectors like agriculture, mining, and tourism for stable returns in Zimbabwe, while diversification is essential to mitigate risks such as the impact of the coronavirus outbreak on the Chinese economy.
Zimbabwe's economic and political landscape remains turbulent, with challenges both locally and globally. A recent analysis by Morgan and Co Research has drawn parallels between Zimbabwe and Venezuela, attributing their economic downturns to unstable systems and leadership. Batanai Matsika, Head of Research at Morgan and Co, discussed the economic outlook for Zimbabwe in 2020 in a recent interview on CNBC Africa.
The Zimbabwean government is currently seeking assistance from international partners to rebuild its economy, as sanctions continue to impact the nation's economic growth. With China focusing on its own priorities, the United Arab Emirates has emerged as a potential source of investment for Zimbabwe. However, economic sanctions, such as Zidera and EU sanctions, hinder Zimbabwe's access to international capital and impede industrial progress. The outlook for 2020 appears bleak, with a projected negative GDP growth of approximately 12.7%.
Morgan and Co's comparative analysis of Zimbabwe and Venezuela sought to identify fundamental issues affecting these nations and provide insights for policymakers. Despite the arrival of leaders like President Emmerson Mnangagwa in Zimbabwe, who promised economic revival, significant progress remains elusive. To facilitate economic turnaround, policy reversals and improved foreign relations are crucial. By enhancing the country's international image and promoting dialogue among political actors, Zimbabwe can attract foreign investment and foster economic growth.
Investors seeking stability in Zimbabwe's uncertain economic climate can consider allocating their capital to sectors like agriculture, mining, and tourism. By focusing on industries that export goods and offer foreign currency earnings, investors can mitigate exchange rate risks. Agriculture, particularly in tobacco and horticulture, shows promise, alongside mining sectors like gold, platinum, nickel, and tourism-related companies.
However, risks loom ahead, notably the potential impact of the coronavirus outbreak on the Chinese economy. Zimbabwe's heavy reliance on Chinese markets poses a threat, emphasizing the need for diversification and new market partnerships. By expanding trade relationships beyond Asia and exploring opportunities in regions like Europe, Zimbabwe can safeguard its economy against external shocks.
As Zimbabwe navigates through these economic challenges in 2020, strategic planning, policy reforms, and diversified investments will be crucial in stimulating growth and fostering stability.
