HARARE: Zimbabwe’s trade deficit with South Africa narrowed 39 percent in the first nine months of 2015 to $417 million compared with $681 million recorded in the same period last year, according to Zimstat. Economic analysts say the decrease is a positive reflection of the country’s responsiveness to a raft of fiscal measures being implemented by the government to cushion the local industry.
Imports from the neighbouring country totalled $1.6 billion while exports settled at $1.2 billion. South Africa is Zimbabwe biggest trading partner, importing mainly finished products in exchange for raw mineral exports.
Among the measures Finance Minister Patrick Chinamasa outlined a few months ago to protect local industry is the ban on second hand clothes and the scrapping of rebate on imported basic goods that can be produced locally.
Duty on second hand vehicles has also been increased while a proposal to remove blankets from the Open General Import Licence for two years has been tabled. These measures form part of extensive interventions, which the government is taking to grow the economy.
Given the persistent liquidity challenges and poor agriculture output in the 2014/15 season, the country’s economic growth rate has been revised from 3.2 percent to 1.5 percent. Economic commentator, James Wadi, said low domestic industrial activity was also to blame for the wide trade deficit.
“The country currently has weak economic activity as consumer spending is low. There’s not much activity taking place in companies as they’re faced with limited cash inflows,” said Wadi. He said there was a need for local industries to “have a skin” on the game and avoid reliance on imported goods.
Overall Zimbabwe’s trade deficit in the nine months to September stood at $2.3 billion after imports of $4 billion and exports of $1.7 billion, with the deficit seen at $3 billion by year end, said Zimstat.
The country has over the years incurred systemic trade deficits due to structural weaknesses in the economy. This has resulted in the closure of many companies, which compromised the country’s global competitiveness, resulting in a marked decline in exports.
Analysts say the country is now more of a trading economy, with capacity utilisation for the manufacturing sector remaining stagnant due to increasing power outages and the strengthening United States dollar against the South African rand.
While the economy has been slowly recovering since 2009, mostly on the back of the mining boom, the consumer market remains dominated by imports from across the border.
