HARARE – Zimbabwe’s external trade will not suffer much from Russia’s war in Ukraine as combined direct imports and exports, per year, to the two countries, amounts to less than US$100 million.
According to official figures from Zimbabwe National Statistics Agency (Zimstat), the country imported goods worth US$54,3 million from Russia last year while at the same time exporting goods worth US$5,6 million to the warring country.
From Ukraine, Zimbabwe imports goods (including wheat) worth US$14,6 million while exporting goods worth US$16 million.
The Russian invasion of Ukraine is snarling global trade while sending commodity prices soaring.
The invasion of Ukraine a major producer of wheat, barley and corn that is consumed largely by Europe, may upset supply chains already constrained by effects of Covid-19 pandemic.
Already shipping companies and trading partners are effectively boycotting Russia to reduce legal and reputational risk. This means trade between Zimbabwe and Russia is affected.
While Zimbabwe can turn to other countries for imports, prolonged conflict in Ukraine will intensify competition and create shortages that could result in price increases as already been witnessed globally following the Ukraine invasion by Russia.
Traders are already self-sanctioning rushing to find other sources of supply in markets that are already tight because of rising demand.
The switch to alternative suppliers is overturning long-established trade flows and further fuelling inflationary pressures.
The S&P GSCI index, a broad barometer for the price of global raw materials, has jumped 18 percent this week, leaving it on track for the sharpest rise on records dating back to 1970, according to Refinitiv data.
Both Ukraine and Russia account for nearly 30 percent of the world’s wheat exports. It’s not just uncertainty about the crisis causing wheat prices to climb, but there’s also worries about infrastructure damage in Ukraine and whether it will hinder the country’s ability to export in the near future.
Furthermore both Russia and Ukraine are also major exporters of metals and other commodities and analysts say that the escalating crisis in Ukraine will have a negative effect on energy prices.
According The Spectator Index, in a tweet Thursday afternoon, brent crude oil surpassed US$119 a barrel on Thursday — the first time it reached triple digits since 2014.
Higher energy prices mean less consumer spending on other goods and services. The cost of doing business also goes up.
In Zimbabwe, energy regulator, the Zimbabwe Energy Regulatory Authority (ZERA), is expected to announce new fuel prices tomorrow and these will be determined by the average import prices for the month of February 2022.
Last week ZERA chief executive officer, Edington Mazambani, told Business Weekly that motorists may need cushioning from rising oil prices.
Mazambani said authorities would have to consult on how best to cushion the country against pressures in international oil prices.
“Because if we are to take the full hit, it will have a negative impact on the economy, so we will have to find ways and means of cushioning the impact to the economy,” he said.
Meanwhile coal price broke through the $US400 to trade at $548 per tonne barrier in response to Russian sanctions this week, more than doubling since the start of 2022.
The highest coal price over the past 10 years came in late 2021 when it surpassed $220 per tonne, showing just how high current quotes are in comparison.
Unfortunately for Zimbabwe, mining inefficiencies will make the country miss such a rally as it currently is producing less than demanded locally, resulting in the government banning coal exports.
Source: Business Weekly