Iran-Israel conflict threatening Zimbabwe's economy

The recent breakdown of ceasefire agreements between Iran and Israel has raised alarms over a potential full-scale conflict in the Middle East, with serious global economic repercussions that could severely impact vulnerable economies like Zimbabwe's.

At the heart of the concern is the Strait of Hormuz, a narrow but critical maritime corridor between Iran and Oman, through which roughly 30% of the world's traded oil and 20% of liquefied natural gas (LNG) exports pass. Any closure or disruption of this chokepoint, amid escalating military tensions, could send global oil prices soaring and trigger inflationary pressures worldwide.

For Zimbabwe, which relies heavily on imported fuel, the threat translates into looming fuel price hikes, higher production costs, and potential economic slowdown.

Engineer Eddington Mazambani, Chief Executive Officer of the Zimbabwe Energy Regulatory Authority (ZERA), warned: "Any disruptions in supply channels will obviously affect supply and push prices upwards. We are monitoring the situation closely and advising authorities to ensure supply security and minimize price impact."

Economist Dr Prosper Chitambara highlighted Zimbabwe's vulnerability to global energy shocks. "The Strait of Hormuz is a key artery for global oil. A blockade would create a massive shock, pushing energy prices up, slowing supply chains, and hurting economic growth worldwide. For Zimbabwe, this means soaring import costs, inflated prices, and weakened demand," he said.

Chitambara cautioned that a prolonged conflict could trigger a global recession, with fragile economies like Zimbabwe bearing the brunt. "Global GDP could shrink by 1-2%, with devastating effects here," he added.

Victor Bhoroma, also an economist, noted that Zimbabwe, lacking domestic oil or gas production, is highly exposed to external price volatility. "Over US$2 billion worth of oil and LNG daily pass through the Strait. Disruptions will ripple through global markets and directly impact Zimbabwe's fuel imports, pushing up costs across all sectors," he explained.

Bhoroma underscored that rising fuel prices would escalate production costs and imported inflation, undermining Zimbabwe's competitiveness and economic stability.

Vice President of the Zimbabwe Economics Society, Misheck Ugaro, expressed cautious optimism that diplomatic efforts might contain the crisis but acknowledged the risks. "Closing the Strait would cause severe inflationary pressures globally. The mere threat has already unsettled markets. Intense diplomacy is needed to prevent a full blockade," he said.

Economist Vince Musewe warned: "Zimbabwe cannot escape inflation driven by oil price shocks given our import dependence. Prices will filter directly into the economy." However, he noted a silver lining: "Gold prices typically rise during conflicts, which could provide some economic relief, though likely insufficient to offset inflationary pressures."

As tensions escalate in the Middle East, Zimbabwe's economic prospects face increased uncertainty. The country's heavy reliance on imported fuel and ongoing recovery challenges mean rising global energy costs could stall growth and worsen inflation.

For now, authorities and experts continue to watch global developments closely, hoping for a diplomatic resolution to safeguard Zimbabwe's fragile economy from further shocks.