Source: Trade deficit declines – DailyNews Live 23 January 2017
HARARE – Zimbabwe’s trade deficit with the rest of the world declined to
$2,3 billion last year compared to $3 billion in 2015, latest data show.
Figures released by the national statistics agency, Zimstat, on Friday
showed that the country imported goods valued at $5,2 billion in 2016
compared to $2,8 billion exports.
Zimbabwe’s balance of trade has remained in negative territory in the last
few years fuelled by economic decline that has hit on productivity while
promoting imports.
In 2014, the country recorded a trade deficit of $3, 3 billion with the
Reserve Bank of Zimbabwe citing in part the retreat in international
commodity prices and lack of competitiveness.
The country’s main exports are still dominated by commodities such as
gold, platinum, chrome and tobacco which are more vulnerable to
international price fluctuations.
Market experts said the decline in imports was mainly as a result of low
aggregate demand emanating from an economic slowdown and lack of
pro-business policies rather than the country’s protectionist strategies.
To curtail the thirst for imports, government last year put in place
measures including banning the importation of certain products through
Statutory Instrument 64 of 2016.
However, the local manufacturing industry, once a major contributor to the
country’s exports is currently struggling due to high labour costs,
clogged cheap capital inflows, antiquated equipment and stiff competition
from imports. As a result, its contribution to exports is now minimal.
The release of the trade figures came at time Old Mutual has projected
that Zimbabwe’s economy would slump further this year due to continued
decline in global commodity prices, fiscal challenges, and possible
difficulties in policy implementation.
“Notwithstanding the improved trend in capacity utilisation, unless
supportive measures are implemented to ensure that foreign currency
generation improves, a reversal of the gains already achieved may result,”
the insurance giant said in its latest economic outlook report.
Old mutual noted that signs of this are already popping up as some reports
suggests that retailers have begun resorting to buying foreign currency at
premium rates on the black market in order to restock and passing on the
premium incurred to customers.
“This, if left unchecked is likely to result in internal inflation and
resultantly less competitive products that could otherwise potentially
earn export receipts.
That said, we are of the opinion that gross domestic product is unlikely
to register positive growth if the foreign currency shortages persist,”
the integrated financial services firm added.
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