Zimbabwe’s economy will register a significant Gross Domestic Product (GDP) growth of 6,5% this year, before shooting to 15% next year, should next week’s elections be credible, with a clear winner, a research report released this week says.

According to a report titled Zimbabwe: A Return to Normalcy by research and consulting firm Emergent Research, there is a 45% likelihood that there will be no clear winner and main parties will agree to form a coalition agreement, a 35% chance that there will be a credible election with a clear winner and a 20% chance that the elections will produce a disputed result and process.

“In a clear winner and accepted election, GDP growth is expected to be 6,5% in 2018, before jumping to 15% in the following year,” the report says.

Capital formation in the form of mining and infrastructure projects is anticipated to materialise and stimulate downstream spending and incomes. Growth will average 12% between 2019 and 2023. Inflation in such a scenario is expected to be below 5%.

A disputed election, the research body said, will result in a period of tepid growth starting with 2,5% in 2018.

“Any goodwill earned so far this year will be largely reversed by a contested result,” the report notes.

“Growth is projected to remain below 4% as in the period 2013 and 2016, where the 2013 results were generally disputed by the opposition.”

In such a scenario, the country is expected to experience “high and accelerating inflation”.

Should there be a coalition government, GDP growth is expected to range between three and 9% with modest inflation of between three to 6%.

On credit expansion and liquidity, credible elections with a clear winner will see Western governments and lenders resuming lending to the Zimbabwean government, companies and projects.

In credible elections scenario, the report projects that liquidity in hard currency is enhanced, interest rates are kept low in the short-term and risk appetite rises.

In a coalition set-up, the report projects that international lenders will be measured in their lending to Zimbabwe accompanied by a possible discord in government administration between different parties stalling projects and programmes.

The report forecasts that in a disputed election, perceived risks and sticky sanctions repel any funding and lending, as well as current investors and lenders seeking to exit Zimbabwe drying up credit.

“The difference between a well-accepted election process and outright disapproval will be vast and consequential. A smooth and internationally accepted election process and outcome will create conditions for lines of credit, improved liquidity and risk appetite which will boost economic activity and GDP growth,” the report observes.

The report notes that credible elections will boost confidence and likely see a fall in the exchange premium on bond notes and Real Time Gross Settlements balances against the US dollar.

“A cut in the exchange premium will lower the cost of imports and ultimately landing price of imports in Zimbabwe cheaper,” the report says.

Emergent Research is a unit of Emergent Capital Management, a private investment management firm largely focused on Zimbabwean investment landscape. Emergent Capital Management has offices in Johannesburg and Harare.