Rand decline threatens Zim exports

ZIMBABWE’s exports will further plunge this year due to the free-fall of the South African rand against the United States dollar, economic analyst Erich Bloch said yesterday.

Report by Gamma Mudarikiri

Bloch told Southern Eye Business that the weakening rand will
have a medium-to-long-term negative impact on the country’s trade with South Africa.

He said on the overall, the net will be a reduction in exports.
“The weakening  rand against the  US dollar is  an indication of  the  weakening of South Africa’s economy  and  this  will result in  the weakening in demand of our exports  to that country,” Bloch said .

South Africa’s economy, in the first quarter of this year, grew at its slowest pace since a recession in 2009.

The country’s gross domestic products grew by 0,9%  in the first four months of the  year down  from 2% recorded  in the same period the previous  year leading  to the contraction  of the manufacturing industry.

While the rand continues on its downward spiral,  South Africa remains one of Zimbabwe’s major trading partners absorbing 34% of the country’s exports.

Zimbabwe imports more than 60% of basic commodities from Africa’s biggest economy.

According to Zimbabwe Statistical Office (Zimstats), exports in the first quarter declined 10% to $813, 57 million against imports of $1,66 billion.

Bloch, however, said the weakening  of   the  rand  will  mean  reduced  import costs for Zimbabwe  and consequently continue  to  supress  inflation.

The country’s inflation  continues to slow down with latest figures released by Zimstats showing that the year-on-year inflation rate (annual percentage change) for the month of May 2013 as measured by the all items.

Consumer Price Index dipped 0,29 to 2,20% from the April 2013 rate of 2,49%.

Bloch said there was need for Zimbabwe to explore new global markets with the view of diversifying from a heavy reliance on South Africa in order to boost exports.

“The country  has  to  intensify  development of alternative  export  markets  rather than to  rely  on South Africa as  that  country’s  economy  continues  to weaken” Bloch added.

Zimbabwe’s trade with the European Union slumped by 9,8% last year and the decline was due to the eurozone crisis and a poor agriculture season.

The country remains a net importer of  goods and  services  with trade  deficit this year expected to widen from $3 billion  up from 2,6 million  recorded in 2012.

Zimbabwe is a net importer of fuel and capital goods.

Zimbabwe’s trade deficit in the first quarter widened to $845,51 million and is expected to widen further as there is generally more importing activity in the second half of the year.

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