THE weakening of the South African rand against the United States dollar is the driving the ailing Zimbabwean economy deeper into the abyss by making locally-produced goods less competitive.
The rand value has been steadily falling since January this year, fluctuating between R10 and R12,50 to the US dollar.
An economic analyst told Southern Eye Business yesterday that the weakening rand made locally-produced goods expensive, forcing local consumers to shun them.
“This is negatively affecting our competitiveness as a country by making South African products more favourable on the domestic market,” Zimbabwe National Chamber of Commerce economist Kipson Gundani said.
“However, what is painful is that there is nothing we can do as that currency is not local and we will continue experiencing this.”
Gundani said this would further push Zimbabwe’s import bill to alarming levels.
Zimbabwe’s reliance on imports continues to drain the economy after registering a negative trade balance of $271,1 million in January, according to the latest trade data from the Zimbabwe National Statistics Agency.
Information shows that goods worth $538,2 million were imported while exports stood at $267 million.
Zimbabwe’s balance of trade has remained in negative territory in the last few years fuelled by an economic decline that has hit on productivity while promoting imports.
In 2014, the country recorded a trade deficit of $3,3 billion with the Reserve Bank of Zimbabwe citing in part the retreat in international commodity prices, lack of competitiveness as having hit on the country’s trade balance.
Confederation of Zimbabwe Industries president Charles Msipha said manufacturing firms were operating under a difficult business environment as a result of the unfavourable trade deficit.
He said the government should continue putting in place measures to address the cost of doing business in the country.
“This is a very difficult quarter for manufacturing firms in the country,” he said.
Zimbabwe adopted use of the US dollar in 2009 after dumping its inflation-ravaged local currency.
As part of measures to curtail imports, the government, in the 2015 budget, hiked duties on a number of goods and products that dominate imports while reducing duties on raw materials to boost local productivity and export competitiveness.