ZIMBABWE’S economy faces mounting pressure from the escalating conflict in the Middle East, with energy, agriculture, remittances and investment among the sectors most vulnerable, according to a new report by FBC Securities.
The brokerage says the conflict has already begun feeding through to domestic prices, with higher fuel costs pushing up transport charges and adding to inflation in March and April.
Diesel is now retailing at US$2,09 per litre, while petrol is selling at US$2,08.
Although the International Monetary Fund said Zimbabwe’s economy expanded by 7,5% last year, growth is now expected to slow to 5% in 2026 before easing further to 4,2% in 2027.
“The conflict has been transmitted through several channels. Zimbabwe imports approximately 40% of its petroleum products (diesel, petrol, jet fuel),” FBC Securities said in its latest economic review.
“Brent crude’s surge from low US$70s to over US$110 has raised transport costs, electricity generation costs (diesel for emergency power), and production costs for all sectors. The pass-through effects to retail fuel prices have been immediate and sharp.”
The report said agriculture could face another blow as fertiliser imports become more expensive.
“Disruptions to shipping through the Strait of Hormuz have raised urea and DAP prices by an estimated 25-30%. This threatens the 2026/27 agricultural season, potentially reducing crop yields and exacerbating food insecurity. Maize, wheat, and tobacco are particularly vulnerable,” FBC Securities said.
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“Zimbabwe relies on imports of urea, ammonia, sulphur and phosphates from Gulf countries, Russia and Morocco. Freight costs to Beira have risen by 88,9%, and the analysis indicates that even under a moderate disruption scenario (6-12 months), fertiliser prices could rise 30-50%, driving maize yield losses of 15-30%.”
Remittances could also come under strain if the conflict affects Zimbabweans working in Gulf states, particularly in Dubai and Saudi Arabia. Zimbabwe receives between US$1,5 billion and US$2 billion annually from the diaspora.
“Remittances from Zimbabweans working in Gulf countries (especially Dubai and Saudi Arabia) are a critical source of household income,” the report said.
“A protracted conflict could reduce these flows, increase poverty and reduce household consumption.”
FBC Securities said the crisis could also derail investment interest from Gulf states, which had shown growing appetite for Zimbabwe’s mining and renewable energy sectors.
“Gulf sovereign wealth funds had shown interest in Zimbabwe’s mining sector (lithium, gold, platinum) and renewable energy. The conflict may delay or cancel planned investments,” it said.
“Letters of credit and trade credit lines have become more expensive and less available, as international banks reassess country risk. This affects importers of fuel, machinery, and raw material.”
Still, the report said mining could cushion some of the shock, with mineral exports expected to reach US$6,5 billion in 2026, supported by firm gold prices.
“With forecasts from global financial institutions still bullish about 2026 gold prices, the favourable hard currency inflow provides essential liquidity support for the ZiG and stabilizes the current account,” FBC Securities said.
“Overall, the economy is on a cautious but positive footing, with steady progress expected across key sectors provided that global shocks remain contained and domestic reforms continue.”
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