Zimbabwe’s economy is on a growth trajectory with more
imports now skewed towards production instead of consumption, an analysis of
latest trade statistics shows.
Latest trade figures from the Reserve Bank of Zimbabwe
(RBZ) for January 2018, on a cash basis, and latest trade figures from the
Zimbabwe National Statistics Agency, show that the country’s trade deficit
widened by 44 percent during the first half of the year to $1,4 billion from $1
billion recorded in the same period last year.
However, a further analysis of this trade deficit indicates
a significant shift from consumptive to productive imports such as critical raw
materials, fuel and electricity.
The statistics also show that consumer goods imports during
the first half fell by more than 34 percent, a reflection that the makeup of
the trade deficit comprises mainly productive imports as opposed to consumptive
imports, previously.
Analysts say the statistics clearly indicate that the
government’s economic policies geared towards expanding the economy were
working faster than previously anticipated.
Finance and Economic Development Minister Patrick Chinamasa
recently said that the economy would grow by 6 percent this year, faster than
the initial national budget projection of 4,5 percent, largely driven by
mining, agriculture and manufacturing sectors.
Even more conservative intuitions like the World Bank, have
revised upwards growth projections for Zimbabwe’s economy to 2,7 percent from
an initial forecast of 1,8 percent.
In an interview with The Herald yesterday, RBZ governor Dr
John Mangudya said the positive aspect of the trade deficit was that it
represented productive imports used by industry and commerce to meet
requirements of the growing economy.
“We have previously advised that there was always going to
be a lag between the growth of exports and decrease in imports,” said Dr
Mangudya. “In the short term, the imports would need to increase in order to
meet the raw material and industrial re-tooling requirements. “Thus the
previously low capacity utilisation of around 45 percent reported last year has
now grown to around 60 percent over the past six months.
“The growth is supported by procurement of more imports for
firms to produce. The trade deficit in a temporary phenomenon and the
government should continue putting in place measures to further expand the
economy; to create employment,” he added.
He said companies such as Delta Beverages and Varum
Beverages have had their capacity utilisation going up to nearly 100 percent,
requiring imports worth about $4 million per week to import concentrates. The
packaging sub sector was also operating close to 100 percent, requiring about
$1 million per week for raw materials.
Other critical productive monthly imports include fuel; $80
million, electricity $20 million; wheat; $20 million and crude soya oil; $20
million. “The open for business proposition is paying dividends as some of the
demand for productive imports are attributable to new entrants into the economy
like Varum Beverages, Trade Kings and expansion programmes by existing firms
such as Davipel, Unilever, Surface Wilmar, Olivine Industries, Tregers among
other,” said Dr Mangudya.
The introduction of Statutory Instrument 64 of 2016, meant
to restrict importation of goods that can be produced locally also triggered
the revival of the industry in the sense that companies were able to operate
within the protected market.
As a result, companies were able to increase capacity
utilisation and the result putting more demand n foreign currency. The
Confederation of Zimbabwe Industries, a lobby group representing local
manufactures said the trade deficit was positive.
“I am happy that the consumer goods imports have gone down.
It means the imports are largely productive,” CZI president Sifelani Jabangwe
said in an interview.
“It is very positive for the economy and it shows that we
are headed in the right direction. We are now investing productively and the
country will benefit in future.”
He said about half of their members recently reported they
were expanding operations and this would result in surge in demand for foreign
currency to import raw materials. Herald
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