Zimbabwe’s exports to South Africa declined 37,3 percent as the South African rand dipped to an all-time low in the month of August. Amid concerns over the strength of the Chinese economy and due to internal pressures within South Africa’s economy, the rand fell to R14 against the US dollar. The weakening rand has been felt in Zimbabwe as exports to South Africa are beginning to show signs of slowing down.
According to the latest trade data from ZimStat, Zimbabwe exports to its neighbour were down 37,3 percent to $86,3 million in August from $137,6 million, while imports from South Africa climbed 5,4 percent from $189,3 million to $199,6 million.
The weakening rand has made imports from South Africa land much cheaper in Zimbabwe. This is despite the policy measures, meant to curb imports, introduced by Government at the Mid Term Fiscal Policy Review. Zimbabwe’s trade deficit for August stood at $316,2 million from $291,4 million recorded in July this year. This represents an increase of 8,5 percent from the July figures.
The stronger US dollar has also seen exports decline 30,5 percent month on month to $142,3 million recorded in August from $204,8 million recorded in July.
South Africa remains Zimbabwe’s largest trading partner with total trade of $285,9 million for the month of August between the two neighbouring countries. This represents 47,5 percent of Zimbabwe’s total trade in terms of value.
Overall Zimbabwe’s trade deficit for the year to August 2015 now stands at $2,02 billion reflecting the over dependency on imports and the decline in exports as the local economy continues to be hamstrung by capacity constraints and lack of competitiveness.
The declining exports have all but reversed the gains registered in May 2015, when Zimbabwe’s exports were showing strong signs of recovery and growing much faster than imports. For July exports grew 14,8 percent while imports grew at a much slower rate of 0,15 percent while in August the trend has now shifted with imports now declining at a much slower rate. Analysts expects the trend to continue as the holiday season approached.
The decline in imports is attributed to the slowdown in economic activity in Zimbabwe and the lower than expected aggregate demand. For the month of August total Zimbabwe exports of goods and services stood at $142,3 million while imports were $458,6 million, resulting in the trade deficit of $316,2 million which was 6,5 percent lower than the July trade deficit of $337,5 million. The decline in the August export numbers also came as a result of lower gold exports.
While consensus says that the country’s trade deficit will likely improve in the near term, the effect of the weakening rand will see further deterioration in the trade deficit in the next few months.
For the month of August 2015 the country’s major export products were tobacco at $57,2 million followed by Ferro Chrome exports which were recorded at $14,1 million. Nickel ore exports were lower at $12,6 million and diamonds come in at a distance $7,3 million. The country also exported electricity worth $7,5 million.
On imports, the major products remain Fuels and Lubes at $80,6 million. This was followed by vehicles (all types) at $32,3 million while medicine and medical equipment were at $19,2 million.
The country also imported maize worth $16,9 million while rice and wheat were at $10,2 million and $3,6 million respectively. – Wires.