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Harare - As John Mangudya, governor of the Reserve Bank of Zimbabwe, readies to deliver the country's monetary policy statement on Wednesday, fund managers and equity market strategists say spending at the bottom of the consumer pyramid will help propel some consumer counters this year.
However, investors are still worried about the exchange rate issue in the liquidity starved country. Moreover, experts believe Zimbabwe's foreign exchange rate problems may only be fixed after elections scheduled to take place later this year.
Mangudya's monetary policy statement is expected to ease some pressures on the financial services sector, amid investor complaints about delayed profit and dividend remittances.
According to John Legat, chief executive officer at Imara Asset Management, "until the exchange rate issue is resolved, foreign investors will be reluctant to invest in the country, either through the Zimbabwe Stock Exchange or direct investment".
He added that domestic corporates will struggle to access foreign exchange, while depositors will continue to face long queues at the banks.
Mangudya is expected to offer solutions to these issues in his monetary policy statement. Zimbabwe says the bond notes currency it uses has equal value to the US dollar, but traders are putting a premium of up to 20% on this.
"We suspect that the Government is hoping to muddle through at least until after the election which they would hope to win. Foreign portfolio investors still cannot expatriate their capital ... (and) multi-nationals cannot receive their dividends," said Legat in a note to clients.
Equities investment strategists at IH Securities said growth in the mining and agriculture sectors - which fuelled spending in the Zimbabwean economy last year - will be lower this year compared to 2017.
Despite the economic challenges and political uncertainty in Zimbabwe in 2017, corporate earnings showed resilience particularly in consumer businesses.
Liquidity challenges and forex shortages also forced Zimbabwean consumers to spend more at home than in regional and international markets, as it was difficult to move money outside the country, IH Securities said in a Zimbabwe Equity Strategy note for 2018 released this week.
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