Consumption to drive Zim growth, says BMI

Published: 24 January 2014

A Business Monitor International (BMI) Zimbabwe Food and Drink Report 2014 said massive remittance inflows from the large Diaspora population continued to drive private consumption in the country and the situation would likely remain so.

The report identified private consumption as a significant engine for economic growth.

"The relative stasis of the manufacturing industry has constrained job creation, and consumption in Zimbabwe has continued to be supported by massive remittance inflows and consumption will therefore be supported even in the absence of an improvement in domestic productivity," read the report.

The report said private consumption would be one of the more resilient components of the gross domestic product (GDP) supported by large remittance inflows from the many Zimbabweans living abroad.

The report indicated that one of the upsides of the tight liquidity conditions has that inflation would remain low.

"Price growth came in at 0, 9% in September 2013 and we are forecasting that it will remain below 4, 0% in 2014.

"These low levels of inflation will boost consumers' purchasing power, while any attempt to prematurely reintroduce a domestic currency would pose the biggest risk to private consumption growth," added the report.

In the retail sector, the report said demand was high for the formal food retail stores and this was projected to account for about 25% of the country's sales compared to about 5% in Kenya, considered among the region's most developed organised retail markets after South Africa, Botswana and Namibia.

Against this background, mass grocery retailers such as South Africa's Pick n Pay keen to increase their exposure in the country were better positioned for expansion.

It said favourable demographic trends and rising incomes would lead to ballooning dairy consumption in Sub-Saharan Africa (SSA).

Although emerging Asia remains the world's largest growth region in terms of volume sales of dairy consumption, multinational dairy companies are facing an increasingly difficult time in China, the region's largest market.

Earlier this year, Chinese authorities boosted domestic dairy firms with multi-million dollar subsidies, and such activity would go some way in explaining a hurried turn to Africa.
- zimmail