Mining cushions Zimbabwe’s ailing economy

Despite nose diving in to what has turned into a weak performing economy, Zimbabwe still yields fruitful earnings from the mining and agricultural sector. These are the two sectors that have managed to sustain and avert the already adverse economy from utter collapse.

Gold, Zimbabwe’s major foreign currency earner in September reached its highest level in 12 months from October last year to September this year. The economy largely depends on exporting the yellow metal which reached its highest level this year.

Despite incurring a net trade position in the past 3 years, as at ten months this year, trade has shown a notable improvement, its best performance in ten years. The gap trade is largely attributed to the strong recovery in gold exports, whose outturn for the month of September was the highest in 12 months by 77% from 71 million in October last year to 126 million in September this year.

Nickel is strongly emerging as another mineral which is earning foreign currency for the country. It reached its highest level of exports in 3 years as at September this year with a significant inclination of 226% from January 2017 to September 2019. Nickel earned the country an average of 95 million in September alone. This can either be attributed to the rise in prices of the mineral or the accretion of great volumes of the mineral in the country.

Zimbabwe’s trading performance which has been greatly improving saw the country experience a trade balance of -$25 320 282, a first of its own as the trade deficit’s monthly average was -$440m from 2010 to 2018. Despite the trade balance remaining negative, this difference of -73% decrease in 3 years is worth noting as a major improvement.

“The trade balance owes its improvement to an economy that is either that is either growing exports at a faster rate to imports or an economy suppressing imports, holding exports stable. In the case of Zimbabwe, imports have sharply declined not on substitution but demand suppression, while exports have largely been tepid on reduced mineral production,” says Equity Axis Analyst Respect Gwenzi.

This improved trade performance since the beginning of the year to September sets Zimbabwe to achieve the most improved trade balance position in 10 years.

-Equity Axis News

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