Macro Analysis /
Zimbabwe

IH Macro Economic Update: Zimbabwe vs. Peers

  • The local economy reflects the region, there is high Inflation, increasing interest Rates and looming political events

  • However, the conditions are more pronounced given pre-existing inflation and exchange rate dynamics

  • Zimbabwe’s ytd inflation is the highest in the region at 118%. The local currency has depreciated the most (266% ytd)

Tatenda Makoni
Tatenda Makoni

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IH Securities
28 July 2022
Published byIH Securities

The local economy reflects the region in that there is above target Inflation, weakening Stock Markets, increasing Interest Rates and looming Political Events. However, the conditions are more pronounced given pre-existing inflation and exchange rate dynamics.

Zimbabwe’s ytd inflation is the highest in the SADC region at 118%, while the local currency has depreciated the most (266% ytd).

Policy measures in the region have been a delicate balance between fiscal sustainability and social support.  We expect the local government to continue providing some level of cushioning for its citizens as an elevated cost of living could increase the risk of social unrest, going into an election year.

A higher loans-to-deposits ratio in developing countries often signals increased lending to support expansion of the private sector. The local loans-to-deposit ratio falls below regional average and could be a result of tightening liquidity, and rising interest rates.

Local food insecurity remains of concern. The 2021/22 rainfall season was below expectations, affecting the ability of individuals to source food from own means. On the other hand, purchasing power has been negatively impacted by a devaluing local currency.

The unemployment rates across the region are difficult to compare given the different definitions used for “actively employed? The local unemployment rate is relatively low as direct result of a vibrant informal sector that accommodates the labour force which cannot be formally absorbed. According to ZIMSTATS’ 1Q22 report, 88% of the employed population are informally employed.