EFE Securities •

5 months ago •

Other Reports

YEARLY REPORT -2024-01-23

In this paper, we endeavour to put our views and expectations on the 
socio-economic landscape for Zimbabwe in 2024, building on the base 
of established of the same in the preceding year. The socio-political 
situation remains complex following the 2023 harmonized elections, 
which saw the ruling ZANU PF party secure a resounding victory and 
President Emmerson Mnangagwa re-elected. However, the main 
opposition CCC did not contest the results through the court process 
but only through utterances and social media as they continue to face 
internal discord. After CCC recalls, ZANU PF was able to gain a twothirds parliamentary majority in subsequent by-elections. Looking 
ahead to 2024, Zimbabwe faces mounting economic pressures from 
drought, inflation, and foreign exchange volatility that could ignite 
social spending demands amidst low disposable incomes and weak 
economic activity. However, the government has limited fiscal space 
to respond to the high social need due to high debt levels. Attracting 
foreign direct investment will be critical to provide budget support.
In 2023, Zimbabwe's economy contended with currency instability, 
rising inflation that peaked over 50%, power shortages, declining 
industrial capacity utilization and weak aggregate demand. Exports 
provided some respite, rising 12% while agriculture posted good 
harvests. However, imports also swelled, widening the trade deficit
gap. Mining output fell due to policy changes and lower commodity 
prices. The local currency depreciated significantly, public debt 
remained elevated at US$17.7 billion, and the budget deficit reached 
ZWL1.4 trillion.
Despite a sluggish start, the ZSE ultimately gained 22% in real terms 
in 2023, buoyed by resilient consumer stocks. Total value traded 
tripled while, volumes faltered by 13%. On the VFEX, seven new 
listings via introductions expanded the exchange to 13 counters, 
though the index declined 22% on repricing effects.
Looking to 2024, Zimbabwe faces significant headwinds that could 
limit GDP growth to around 2.9%. Inflation may moderate but remain 
high at 35%. Impending drought conditions pose risks to agriculture 
and food security. Power shortages and weak mineral prices could 
hamper mining. External engagement remains critical for fiscal 
support. On balance, 2024 will likely be a difficult year vulnerable to 
weather shocks and global factors. However, the ZSE should retain its 
appeal as an inflation hedge, with stability in blue-chip stocks although 
risks are biased downside. The VFEX offers stability but needs 
enhanced liquidity. In summary, opportunities remain selective amidst 
a challenging backdrop requiring further reforms.