Zimbabwe’s export sector delivered robust growth in June, providing much-needed support for the economy hamstrung by foreign currency challenges and exchange rate instability.
Exports jumped 29,9 percent in June from May, marking the fastest pace of month-on-month growth since March 2021 when exports grew by 35 percent, according to ZimStat data released on Wednesday.
Zimbabwe is grappling with an ever-depreciating local currency and in turn, high inflation levels and the stronger resilience of the export sector — a key driver of Zimbabwe’s growth — provide a boost to its economy.
Without much success, authorities have put in place various measures to try and manage the free fall of the local currency and the subsequent high inflation levels.
But a resilient trade sector would help offset the broader weakness.
Imports, meanwhile, grew by just 4,86 percent to US$750, 5 million from US$715,7 million recorded in the previous month, suggesting domestic demand remains volatile after a sharp rise in some months and big drops in others.
June’s strong export performance narrowed the country’s trade deficit to just US$83, 9 million after exports grew at a faster rate than imports.
In May 2022, the trade deficit was US$202,5 million.
Exports for June increased to US$66,6 million up 29,9 percent from US$513 million recorded in May 2022.
At the same time, imports for June 2022 grew by just 4,86 percent to US$750, 5 million from US$715,7 million recorded in the previous month.
If exports continue to grow at a faster rate than imports, it could result in less pressure on the exchange rate, experts say.
“Ordinarily a jump like that would be positive news for the country and for the currency, as it would imply a strengthening of the balance of payments position, and therefore the currency,” economic analyst Farai Mutambanengwe told Business Weekly by text.
He, however, said in reality it has not always been the case.
“For the past two years, however, growth in exports has not translated to increased availability of foreign currency on the market. It has not strengthened the ZWL as would be expected, and in fact, we are seeing less and less foreign currency reaching the Auction, which is the primary allocation mechanism for export earnings into the economy,” Mutambanengwe said.
Exports were largely driven by semi-manufactured gold (22,8 percent), nickel mattes including platinum group of minerals (PGMs) (20 percent), mineral substances (19 percent), nickel ores and concentrates (16 percent).
During the month of June 2022, the country exported semi-manufactured gold valued at US$152,2 million, signifying a decline from US$165,9 million in May 2022.
In the same month of June 2022, the country exported 1,295,0 tonnes of nickel mattes valued at US$133,6 million, compared to 575,0 tonnes valued at US$82,6 million in May 2022.
Besides the major minerals usually exported, Zimbabwe also exported 3 kilogrammes of industrial diamonds valued at US$2,1 million in June 2022, while in May 2022, 4 kilogrammes of industrial diamonds raked in US$5,9 million in export earnings.
On the other hand, Zimbabwe’s major imports remained mineral fuels and mineral oil products which stood at 20.1 percent in June 2022, compared to 19,2 percent in May 2022.
This was followed by machinery and mechanical appliances at 16,2 percent in June 2022.
Other imports in June 2022 included animal/vegetable fats and oils (8,4 percent), vehicles (8,1 percent), electrical machinery, and equipment (4,3 percent).
Notably, major imports in Zimbabwe were aggregated to reach 92,9 percent in June 2022, according to ZimStat.
Cereal imports including maize increased from 3 percent in May 2022, to 4,2 percent in June 2022. Rice, which makes the bulk of cereal imports constituted 1,6 percent in June 2022, compared to 1,4 percent in May 2022.
South Africa remained the country’s major trading partner with 40,9 percent of the total exports.
Exports to the United Arab Emirates constituted 22,9 percent in June 2022, compared to 32,4 percent in May 2022.
The value of exports to China decreased to 5.4 percent in June 2022, from 13,2 percent in May 2022, Zimstat said.
The proportion of imports from South Africa was 43,3 percent in June 2022, compared to 42,8 percent in May 2022.
Furthermore, the proportion of the value of imports from Singapore increased to 14,7 percent in June 2022, from 13,8 percent in May 2022. Imports from China decreased to 11,1 percent in June 2022, from 12,1 percent in May 2022. – Business Weekly
