Zimbabwe, SA trade gap widens

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ZIMBABWE’S trade deficit with South Africa (SA) widened in 2018 after imports grew by more than $1 billion.
Official statistics released by the Zimbabwe National Statistics Agency recently show that Zimbabwe imported goods and services worth $6,4 billion from SA during the 11 months to December 31, 2018 progressing from imports of $4,96 billion during the 11 months to November 30, 2017.
Figures for December 31, 2017 and January 31, 2018 were not provided.
Zimbabwe’s exports however shrunk by four percent during the same period from $2,18 billion in 2017 to $2,098 billion in 2018.
The trade gap between the neighbouring countries widened by 54,33 percent from $2,78 billion in 2017 to $4,29 billion in 2018.
Researchers at local advisory firm Equity Axis say the trade deficit was spurred by the suspension of Statutory Instrument 122 of 2017.
“Coupled with the waiver was a sharp rise in the prices of goods on the local market amid shortages. The growing import pressures consequently pushed the country’s overall trade deficit in 2018 higher to $2,5 billion from $1,7 billion in 2017, a trend reversal from a five-year narrowing position,” Equity Axis said recently in a note.
Government suspended the Statutory Instrument in October last year to increase the flow of basic goods into the market after panic and speculative buying had led to shortages of some commodities.
SA has maintained a trade surplus with Zimbabwe since 2007, with the surplus widening over the years mainly due to Zimbabwe’s economic woes.
The trade gap between the two countries could worsen after SA last year terminated a trade agreement which had been in place since 1964, opting for the Southern African Development Community Trade Protocol on trade.
Business has warned that will lead to Harare losing its preferential access to Pretoria.
Some reports however say discussions on the termination of the agreement are still ongoing between the two countries.
Meanwhile, Zimbabwe is reportedly considering pegging its mooted new currency — which Finance minister Mthuli Ncube says will be introduced this year — against the South African rand.
The move, which is apparently one of several proposals on the table that the authorities are considering seriously, would please local industry to no end should it see the light of day — as manufacturers have consistently agitated for the adoption of the rand as Zimbabwe’s interim trading currency.
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