The Zimbabwe Economic Policy Analysis and Research Unit said subdued growth in emerging economies like China will likely have implications on the Zimbabwean economy in 2016 because of the dominance of primary products in the country’s export basket.
ZEPARU’s Economic Barometer Volume 19 launched yesterday highlighted that slowed growth in markets including China, will continue suppressing commodity prices and Zimbabwe is likely to face challenges.
“Slowed growth in emerging economies like China is likely going to have implications on Zimbabwe in 2016 given that the country’s export basket is largely composed of primary products,” said ZEPARU executive director Dr Gibson Chigumira while presenting the highlights of the Economic Barometer.
Highlighting the effects of subdued economic growth in emerging economies, Dr Chigumira said gold prices in the fourth quarter of 2015 averaged $1104,65 down 7,91 percent from the price in the corresponding quarter 2014.
He said platinum’s average price in the fourth quarter of 2015 was $907, 64 down 26,08 percent from the price in the corresponding period last year.
By the end of 2015, total gold deliveries reached 18,305 tonnes, falling short of the target of 18,7 tonnes as low global mineral prices had an effect on production for most mining houses especially in the gold and platinum mining sector.
Despite a general slump in international gold prices, small-scale miners contribution in two years went up to 40,1 percent from 19,2 percent in 2013.
Dr Chigumira said Zimbabwe’s exports and imports continue to
be characterised by lack of diversification with fuel remaining the only largest import product for both 2014 and 2015.
The top five export products for 2014 and 2015 remained the same and Dr Chigumira said this demonstrates the country’s vulnerability to shocks, especially with respect to commodity prices, as the exports remain largely unprocessed agriculture products and mining products.
He said maize and wheat prices also declined 3,67 percent and 32,35 percent respectively during the year compared to the previous year.
Dr Chigumira said Zimbabwe has the largest national maize deficit in the region, estimated at 645 000 metric tonnes and the declining maize and wheat prices coupled with the strengthening United States dollar is expected to enhance the country’s capacity to import these basic commodities.
Reports from the Department of Agricultural Technical and Extension Services estimate the maize cropped area to be less than a third of the area cropped during the same period last season.
“Declining maize and wheat prices coupled with the strengthening United States dollar enhances the country’s capacity to import these basic commodities.
‘‘This is particularly relevant now in the face of looming drought for the 2015/16 season resulting from the El Nino effect.
“Government should, however, make sure there is maximisation of production in areas that received modest rainfall so that they complement on those areas facing drought,” said Dr Chigumira in the Economic Barometer.