Harare – Zimbabwe’s imports from South Africa (the country’s biggest trade partner on record) rose to the second highest level in two years, as the country continued to experience a firm demand for fuel and food, figures from Zimbabwe National Statistics Agency (ZIMSTAT) shows.
Imports from South Africa in December of 2018 rose to $261 million which is the second highest monthly value over the last 2 years.
Overall, Zimbabwe imported goods worth $2,56 billion from South Africa in the 11 months period to December 2018, while exports came in at $2,1 billion, representing a trade deficit of 23%.
In October 2018, government resolved to indefinitely suspend sections of Statutory Instrument 122 of 2017 to increase the flow of basic goods into the market following growing concerns that some basic goods may not be available in the festive season as the central bank struggled to allocate enough foreign currency for the importation of basic goods and commodities.
Coupled with the waiver was a sharp rise in the prices of goods on the local market amid shortages.
The growing import pressures consequently pushed the country’s overall trade deficit in 2018 higher to -$2,5 billion from -$1,7 billion in 2017, a trend reversal from a 5 year narrowing position.
Zimbabwe recorded $6,9 billion worth of imported goods in 2018, from $5.4 billion recorded in 2017.
On the exports side, 2018 full year outturn was at $4.4 billion, representing an increase of 19 percent from $3.7 billion worth of exports recorded in 2017. However, this was not enough to cushion the trade deficit.
Diesel, petrol and wheat were among the top imports, while tobacco, and minerals such as gold, nickel, diamond and ferrochrome contributed the most to the country’s exports by value.
Since 2007, South Africa has always maintained a trade surplus with Zimbabwe with the surplus widening over the years mainly attributed to the economic instability experienced in Zimbabwe and the volatility of the South African Rand to the US dollar.
In 2016, South Africa’s exports to Zimbabwe were almost $2 billion while imports were a mere $388 million. This represented 3% and 1% share of South Africa’s total exports and imports, respectively.
Other countries like Mozambique, China, United Arab Emirates and Zambia have also remained Zimbabwe’s top trading partners.
A weak trade balance normally result in a weakening currency for the deficit country against the currency of the surplus country. Zimbabwe however does not have a local currency in official terms.
Its pseudo currency has however been losing value to both the USD and the rand over the last one year period. Some economist have advocated for the rand as a trading currency in disfavour of the USD.
Their argument has been that the SA rand is relatively weaker to the USD and can trade flexibly with the region without wider disparities thus ensuring export competitiveness.
The government has rejected this option and is looking at introducing its currency in a few month’s time in overdue currency reforms. The lack of exchange rate is readily wrecking havoc through market distortions and arbitrage.
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