Fresh shocks loom for Zim

LIVINGSTONE MARUFU

A fresh wave of economic headwinds could ravage Zimbabwe’s economy as escalating tensions in the Middle East, marked by the collapse of peace talks and the looming risk of a United States naval blockade of the Strait of Hormuz, send global oil markets into renewed turmoil, economists have warned.

The breakdown in negotiations between Iran and a United States–Israel axis over Tehran’s nuclear programme has effectively reset the conflict, wiping out earlier optimism that had briefly cooled global crude prices.

Brent crude, which had softened to around US$94 per barrel ahead of the talks, has since surged past US$111, an abrupt shift now pointing to imminent increases in Zimbabwe’s already elevated fuel pump prices.

For a country that imports virtually all its fuel, the implications could be severe.

Apparently, the situation has been compounded by heightened military tensions around the Strait of Hormuz, a critical artery through which roughly 20% of global oil supply flows.

Any disruption, real or perceived, tends to trigger instant price spikes on international markets.

There remains a narrow diplomatic window, however, with analysts suggesting the possibility of a second round of negotiations.

But until then, markets are pricing in risk and the situation in Zimbabwe could be dire.

Economist, Titus Mukove said the impact of the raging conflict is already visible.

“The impact of the ceasefire collapse on Zimbabwe’s economy is quite visible. And we are already feeling it,” he said.
“The biggest risk is through energy prices and supply chains because Zimbabwe imports 100% of its fuel. We have no oil or gas production. So fuel prices will spike.”

That spike, economists warn, will cascade across the economy, driving up transport costs, production expenses, and ultimately the prices of basic goods.

Zimbabwe already ranks among the countries with the highest fuel prices in the region, second only to Malawi, amplifying the domestic impact of global shocks.

Mukove also warned that the situation could trigger classic imported inflation.

“Higher fuel costs raise production and transport costs across industries. This erodes disposable incomes and increases business operating costs because fuel is imported,” he said.

Beyond fuel, Zimbabwe’s trade channels are also exposed. The country relies heavily on Dubai as a gateway for exports, particularly gold, which accounts for a significant share of foreign currency earnings.

“About 50% of Zimbabwe’s exports go through Dubai. If this conflict persists, it will disrupt this pipeline and significantly affect export earnings,” Mukove said.

That risk comes at a time when gold has been a rare bright spot for the economy, generating billions in export receipts. Any disruption to that corridor could amplify already mounting external pressures.

The inflation outlook is already deteriorating. Zimbabwe Gold annual inflation rose to 4.4% in March from 3.8% in February, an early signal of building price pressures that could accelerate if oil prices remain elevated.

Economists now broadly agree that the government’s 5% growth target is slipping out of reach.

“It is no longer very optimistic,” Mukove said.
“Prolonged conflict could even trigger a global slowdown, and Zimbabwe will not be spared because we are deeply linked to global supply chains.”

The immediate policy response, analysts say, lies in mitigation rather than prevention.

Short-term measures include adjusting fuel taxes and duties to soften price shocks, while longer-term strategies must focus on building strategic fuel reserves and strengthening energy security.

Mukove also pointed to the need to leverage Zimbabwe’s gold earnings more strategically.

“We need to use our gold reserves to cushion against these global shocks,” he said.
“At the same time, we must ensure key export routes remain open.”

Another economist Malone Gwadu said the renewed Middle East tensions threaten to derail economic assumptions made at the start of the year.

“Now that it’s a deadlock and we are back to square one, it can potentially increase the price of fuel in Zimbabwe,” Gwadu said.
“It poses a threat to inflation projections and undermines fiscal and monetary planning. Corporates will need to revisit budgets in line with the new realities.”

He urged policymakers to respond pragmatically, particularly through tax adjustments to cushion both industry and consumers.

“Gradual monitoring of the situation and adjusting duties in a way that cushions citizens is the way to go,” he said.

Yet another economist, Vince Musewe, warned that prolonged conflict would deepen Zimbabwe’s economic fragility.

“The end of that war is critical for economic growth. The longer it goes on, the less likely we are to achieve our projections,” Musewe said.
“We will see inflation rising as fuel and logistics costs increase. Sadly, it is the poor who will suffer most.”

Tony Hawkins, another economist, said the external shock could fundamentally reset Zimbabwe’s economic outlook.

“Net effects will be adverse on inflation, exchange rate, economic growth and exports,” Hawkins said.
“That 5% growth rate is now very unlikely.”

Indeed, early signs of strain are already emerging. Surveys indicate that over 90% of Zimbabwean firms are experiencing disruptions linked to the crisis, with fuel costs reportedly rising by more than 30% in recent weeks.

Businesses are also grappling with supply chain bottlenecks, raising the spectre of wider goods shortages if the conflict drags on.