Zimbabwe’s trade balance position continues to improve as imports continued to decline while exports increased between January and August 2020, a trend that extends from last year and supports efforts to stabilization of the economy.
Dependence on imports, due to limited local production capacity, has been one of the main structural flaws in Zimbabwe’s economy, which has created a severe shortage of US dollars, thereby exerting pressure on the national currency.
The government is, however, working on a cocktail of interventions, including stimulating investment, production and productivity, providing incentives and developing value chains as part of Zimbabwe’s National Industrial Development Policy (ZNIDP). (2019-2023) which forecasts a 30 percent contribution to the gross domestic product (GDP) of the manufacturing sector.
Statistics from Zimbabwe’s National Statistics Office (Zimstat) show that the value of imported goods and services during the review period decreased 3.6% to $ 2.96 billion compared to the same period in 2019.
During the same period, Zimbabwe exported goods and services worth about $ 2.54 billion, which is an increase of about 3.8 percent over the same period of the year previous one, thus improving the trade balance.
Trade experts say Zimbabwe’s trade balance averaged minus US $ 233.94 million from 1991 to 2019, reaching a record high of US $ 293 million in December 2000 and a record low of minus 3.95 billion of US dollars in December 2009.
As there was a notable decline in imports at a time when exports registered an increase, the trade deficit improved to around US $ 427.2 million in 2020 from US $ 719.9 million. US dollars recorded over a similar period in 2019.
Zimbabwe’s Economic Policy Research and Analysis Unit (Zeparu) says an improvement in the trade balance is good news for Zimbabwe’s economy, as it implies that the rate of foreign currency outflows to finance the surplus of imports over exports has declined.
“However, there is still an overdependence on foreign markets for goods and services, as the trade deficit is still large, demonstrating the need to redouble efforts to replace imports,” Zeparu said.
The quasi-government economic research unit said the period under review also includes when the Covid-19-induced lockdown also took effect, affecting trends in both exports and imports.
Trade is affected by reduced global demand as well as disrupted supply chains as restrictions are placed on the free movement of goods and people.
“Thus, it is also possible to assess whether the Covid-19 pandemic has strongly affected the country’s ability to import and export, especially compared to previous periods when there were no restrictions.
“The lockdown in Zimbabwe was imposed at the end of March 2020. A review of import trends between 2017 and 2020 over the period from March to August should reflect to what extent import capacity has been affected by the lockdown,” Zeparu said. . .
It is evident that there was a shock in April 2020 when the lockdown was at its most stringent level, but the shock reduced between May and June and in July 2020, the effect of the pandemic on imports. was no longer visible.
In June 2020, exports were above the levels recorded in 2019, which means that the nature of the main products exported to Zimbabwe is not very sensitive to lockdowns.
This is understandable, given that it is mainly unprocessed mining products that constitute the bulk of Zimbabwe’s exports.
Thus, Zeparu said the effects of the pandemic are expected to be felt more on imports than exports, which is also why the period from January to August 2020 saw imports decrease but not exports.
Zimbabwe has experienced systemic trade deficits in recent years due to declining exports.
Zimbabwe is a net importer of fuel and capital goods. The main exports are gold and tobacco. Other key exports include nickel, chromium, diamonds and platinum. – Sunday mail