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'Zimbabwe economic outlook grim'

by Staff reporter
08 Jul 2022 at 07:36hrs | Views
ECONOMISTS have warned that Zimbabwe's economic outlook looks "dark" given the country's widening trade deficit following the government's suspension of customs duties on imported consumer goods.

Statistics released by the Zimbabwe National Statistics Agency (ZimStat) on Wednesday indicated that the total value of exports decreased by 12,6% from US$587,3 million in April to US$513,1 million in May.

Imports increased by 12,1% to US$714,5 million from US$637,2 million in April 2022. According to the statistics, Zimbabwe's major imports are mineral fuels and oil products while South Africa remained the country's major trading partner.

"In order to strengthen the country's export earning capacity, it is necessary to look closely at export drivers," ZimStat said.

"Data for May 2022 shows that Zimbabwe's main exports were semi manufactured gold (32,3%), nickel ores and concentrates (23,2%), nickel mattes including platinum group of minerals (PGMs) (16,1%), ferro-chromium (8,3%) tobacco (4,2%), platinum unwrought or in powder form (3%), semi coke of coal (2,2%), chromium ores and concentrates (1,4%) and industrial diamonds (1,1%)."

Economists attributed the surge in the country's import bill to Statutory Instrument (SI) 98 of 2022 which suspended customs duties on basic commodities to alleviate shortages.

Confederation of Zimbabwe Industries president Kurai Matsheza said a trade deficit would not develop any country.

"Prior to the legislation (SI 98 of 2002), our capacity utilisation was going up and our production volume was picking up. It (SI) has worked against us. We are still experiencing foreign currency shortages and there is no local productivity. Our capacity to produce continues to dwindle and it spells doom for our economy," Matsheza said.

National Consumer Rights Association spokesperson, Effie Ncube said consumers "will have to pay for the effects of a trade deficit".

"An unfavourable balance of trade will only burden the ordinary person as they will have to spend more for less. Assuming that all things are normal, imported goods are more expensive than those that are locally produced and it will only drive the inflation higher," Ncube said.

"It will also kill local productivity. What we are going to see is more retrenchment. Without productivity there is no employment. This means that there will be a few people who will have money to spend. It's a vicious cycle. The environment is not conducive for local industry capacitation."

But while addressing delegates at the Buy Zimbabwe 2022 Public Procurement Conference in Harare on Wednesday, President Emmerson Mnangagwa insisted that local products were dominating the market.

Source - NewsDay Zimbabwe
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