“The strong external sector position was spurred by merchandise exports which increased by 5.8% from US$4.7 billion in 2019 to US$4.9 billion in 2020”
HARARE – Zimbabwe’s balance of payment improved by 4.25% in 2020 compared to the same period last year on the back of significant growth in exports.
The balance of payments is the record of all international trade and financial transactions made by a country’s residents.
The balance of payments has three components—the current account, the financial account, and the capital account. Current accounts measure international trade, net income on investments, and direct payments. The financial account describes the change in international ownership of assets. The capital account includes any other financial transactions that don’t affect the nation’s economic output.
According to figures presented in the 2021 Monetary Policy Statement presented by Reserve Bank of Zimbabwe Governor Dr. John Mangudya, preliminary estimates show that the current account improved from a surplus of US$0.9 billion in 2019 to a surplus of US$1.1 billion in 2020.
“The strong external sector position was spurred by merchandise exports which increased by 5.8% from US$4.7 billion in 2019 to US$4.9 billion in 2020,” said Mangudya.
The growth in exports was largely driven by increases in exports of the platinum group metals (PGMs), amid improved palladium and rhodium prices. The increase was, however, partially offset by declines in exports of gold, tobacco, manufactured goods, chrome ore, and diamond.
On the other hand, merchandise imports are estimated to have registered an increase of 5.1% to US$4.7 billion in 2020, from US$4.5 billion in 2019, notwithstanding sharp declines in imports of energy, notably electricity, fuel, raw materials, machinery, manufactured goods and vehicles in the second quarter of 2020.
Dr Mangudya said this was mainly due to the impact of Covid-19 restrictions domestically and externally.
“Food imports, however, increased by 204%, from US$194.3 million in 2019 to US$591.6 million in 2020, on the back of increases in maize, wheat, and rice imports,” said Mangudya.
He added that maize imports sharply rose from US$26.7 million in 2019 to US$297.8 million in 2020, reflecting the impact of two consecutive drought years.
The services sector was hit hard by the ongoing COVID-19 pandemic with both exports and imports well below pre-pandemic levels declining from US$603.2 million to US$331.4 million and from US$909.1 million in 2019 to US$769.6 million in 2020 respectively.
Dr. Mangudya said that the current account is projected to remain in a surplus position in 2021, albeit a somewhat reduced margin as improved foreign direct investment inflows and other capital flows are envisaged to shore-up imports of goods and services as the economy recovers.
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