The formal retail sector in Zimbabwe will experience tepid growth, with the grocery retail side set to increase by 1,28% due to an increase in consumer spending, an international financial research body has said.
BY TATIRA ZWINOIRA
As disposable income decreases, spending is projected to be geared more towards basic commodities, leading to a bump in grocery sales, BMI Research said in a retail sector report on Zimbabwe.
“We expect the formal retail sector to experience tepid growth over 2017, with the mass grocery retail sector outperforming over this period. Underpinning our view, food and non-alcoholic drinks spending will grow at 1,28% in dollar terms — slightly outperforming total household spending growth, which we forecast at 1% over 2017,” BMI Research said.
“Throughout our forecast period, we expect consumption to be geared around essentials, which we forecast to account for 70% of total household spending. With a large proportion of Zimbabweans either in informal or vulnerable employment, we expect growth to remain tepid.”
BMI said they believed that the income insecurity, together with low income levels, would gear consumption toward subsistence-based spending — preventing significant consumption growth.
This comes on top of BMI’s country-risk report forecasting Zimbabwe to emerge from two consecutive years of recession, with real gross domestic product growth projected to expand by 0,6% in 2017.
“We believe that there will be an uptick in spending from the Zimbabwe consumer. But, we are still a long way from describing this country as having a positive consumer outlook, a fact highlighted by our private consumption real growth forecast, which remains in negative territory with a projected year-on-year decline of 0,5% in 2017,” BMI said.
The research company predicts the uptick in inflation will be symptomatic of an increase in consumer spending as the bond notes offer some relief to the economy’s ongoing liquidity crisis.
Consumer Council of Zimbabwe deputy executive director, Rosemary Mpofu said the increased usage of plastic money, mobile money and retailers using promotions have spurred consumer spending.
“As a result of using plastic and mobile money some consumers end up buying impulsively which increases sales for retailers,” she said.