Boston, MA -- (ReleaseWire) -- 01/27/2014 -- We believe private consumption will be an important engine of growth in the years ahead. Although the relative stasis of the manufacturing industry has constrained job creation, consumption in Zimbabwe has continued to be supported by massive remittance inflows from a large diaspora population, and this is unlikely to change. Consumption will therefore be supported even in the absence of an improvement in domestic productivity.
Private consumption will be one of the more resilient components of GDP, supported by large remittance inflows from the many Zimbabweans living abroad. Furthermore, one of the upsides of the tight liquidity conditions is that inflation will 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. Any attempt to prematurely reintroduce a domestic currency would pose the biggest risk to private consumption growth.
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Key Industry Trends
Nestle Zimbabwe Expansion: The world's largest producer of dairy goods, Nestle, announced plans in November 2013 to dramatically expand its production facilities in Zimbabwe. This follows French company Danone's announcement in October that it was to purchase a 49% stake in West Africa's largest maker of frozen dairy products, Fan Milk International.
BMI holds the view that favourable demographic trends and rising incomes will 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 goes some way to explain a hurried turn to Africa.
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