Figure 1: Merchandise Trade Balance in Zimbabwe (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
Total merchandise imports to Zimbabwe have increased to USD 4.1 billion in 2018, from an annual average of USD 3.9 billion from 2015 to 2017[1]. Exports also increased to USD 4.0 billion in 2018, from an annual average of USD 3.4 billion from 2015 to 2017[2]. The growth in exports has improved Zimbabwe’s merchandise trade balance to a deficit of -USD 62.8 million in 2018 from a deficit averaging -USD 517.6 million from 2015 to 2017[3]. But the growth in merchandise imports has had a short-term negative impact on gross official reserves due to the persistent currency crisis in Zimbabwe.
Figure 2: Gross Official Reserves in Zimbabwe (2016-2022)
Sources: IMF 2019a, Zimbabwe Staff-Monitored Program; IMF 2017, Zimbabwe 2017 Article IV Report. Notes: (*) Figures from 2018 to 2020 are projections from the IMF, 2019; (**) Figures from 2021 onwards are projections from the IMF, 2017.
Gross official foreign exchange reserves are projected to have decreased to USD 87.0 million in 2018 from an annual average of USD 309.0 million from 2015 to 2017[4]. During this period, the ZWB depreciated by -35.0% in 2018 to ZWB 2.0 per USD (2017: -23.1%)[5]. The ZWB remained fixed at the pegged exchange of ZWB 1 per USD in 2015 and 2016[6]. But this is only the official ZWB exchange rate, which has diverged significantly from the parallel or black-market exchange rates. Imports have increased in spite of the depreciation in the currency due to the widening divergence between the official and black-market exchange rate following a short period of stability in 2015 and 2016. The ZWB was introduced with a 1:1 peg to the USD and issued since December 2014 to replace the demonetised ZWD because the inability to print currencies in the multi-currency system led to severe cash crises in Zimbabwe[7]. The ZWD was only demonetised in 2015 even though it was replaced by the multi-currency system after the hyperinflation period in 2009[8]. But the pegged exchange rate was undermined by the parallel or black-market exchange rate resulting in a 50.0% depreciation 2017 and another 200.0% depreciation in 2018 which widened the spread between the official and parallel market exchange rates[9]. Hence in February 2019, the Zimbabwean government and central bank authorities reintroduced the ZWL and disbanded the multi-currency system[10]. Gross official reserves are projected to increase to USD 137.0 million in 2019, which is equivalent to 0.2 months’ import cover[11]. In the forward-looking medium-term from 2020 to 2022, gross official reserves are projected to increase further to an annual average of USD 223.0 million (approx. 0.4 months’ import cover)[12]. The growth in imports has had a short-term impact on Zimbabwe’s current account balance but in the forward-looking medium-term the current account balance is projected to remain volatile due to the cash constraints and challenges of reintroducing the ZWL.
Zimbabwe’s current account balance deteriorated to a deficit of -USD 1.0 billion in 2018, from a deficit averaging -USD 881.3 million from 2015 to 2017[13]. The current account balance is projected to improve to a deficit of -USD 493.0 million (approx. -2.2% of GDP) in 2019[14]. In the forward-looking medium-term from 2020 to 2022, the current account balance is projected to deteriorate to an annual average deficit of -USD 672.7 million (approx. -2.9% of GDP)[15].
Figure 3: Current Account Balance in Zimbabwe (2016-2022)
Sources: IMF 2019a, Zimbabwe Staff-Monitored Program; IMF 2017, Zimbabwe 2017 Article IV Report. Notes: (*) Figures from 2018 onwards are projections from the IMF, 2019; (**) Figures from 2021 onwards are projections from the IMF, 2017.
However, Zimbabwe is still dependent on agricultural exports which have made exports earnings volatile due to exports being vulnerable to the adverse impact of climate change. For example, Zimbabwe has faced a number of climate change related natural disasters affecting agricultural production. In February 2017 Zimbabwe faced the severe aftermath of the armyworm infestation which affected some 130,000 hectares of maize and millet[16]. Zimbabwe is also dealing with the aftermath of the 2015/16 El Niño drought which left more than 2.4 million citizens in extreme or crisis-level food insecurity[17]. In addition, Zimbabwe is dependent on mineral commodity exports which means export earnings are vulnerable and have been affected by commodity price volatility and the general decline in commodity prices since 2014. For example, gold prices have been volatile having declined by an annual average of -9.3% in 2015 and 2016 to USD 1160.1 per ounce in 2015, before recovering to its medium-term average of USD 1258.2 per ounce from in 2016 to 2018[18]. Nickel prices declined by an annual average of -12.2% from USD 15,030.0 per MT in 2014 to USD 9,595.2 per MT in 2016, before recovering to USD 10,409.6 per MT in 2017[19]. The spot price of iron ore also declined by an annual average of -22.0% from USD 97.4 per MT in 2014 to USD 58.6 per MT in 2016, before recovering to USD 71.1 per MT in 2017[20]. The top agriculture-based and commodity exports such as tobacco, gold, nickel ores, iron and diamonds constituted 73.8% of Zimbabwe’s total export earnings in 2018 which has increased from the average of 72.3% from 2015 to 2017 (2014: 67.3% of exports)[21]. In spite of this concentration of exports, Zimbabwe is well integrated in terms of regional trade with neighbouring countries in COMESA and the SADC but its trade is unbalanced.
Figure 4: Nominal Exchange Rate in Zimbabwe (2015-2018)
Sources: IMF 2019a, Zimbabwe Staff-Monitored Program; IMF 2015, Zimbabwe 2014 Annual Report.
The top-five exports from Zimbabwe to COMESA are plastics, sugarcane products, tobacco and fish which constituted 1.7% of total exports in 2018 (2015-‘17: 1.8% of total exports)[22]. The value of the top-five exports from Zimbabwe to COMESA increased to USD 63.8 million in 2018 from an annual average of USD 60.9 million from 2015 to 2017[23].
The value of total exports from Zimbabwe to COMESA decreased to USD 150.7 million (approx. 3.7% of total exports) in 2018 from an average of USD 202.5 million (approx. 6.0% of total exports)[24]. These are relatively poor or below-average levels of intra-regional trade given that the COMESA average intra-regional exports level was 11.9% of total exports in 2018. The COMESA intra-regional exports, meaning total exports amongst COMESA countries, as a share of total exports to the world increased from an average of 10.5% from 2015 to 2017[25]. Given Zimbabwe’s balance of merchandise trade in the region, there is room to increase its exports to COMESA countries.
Table 1: COMESA Regional Trade for Zimbabwe (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
Zimbabwe’s top-five imports from COMESA are animal feed, petroleum, tobacco, non-alcoholic beverages and essential oils. Although these imports are diversified they constituted 5.9% of total imports to Zimbabwe in 2018 (2015-‘17: 2.9% of total imports)[26]. The value of the top-five imports from COMESA to Zimbabwe increased to USD 243.4 million in 2018 from an annual average of USD 113.0 million from 2015 to 2017[27].
The value of Zimbabwe’s total imports from COMESA decreased to USD 539.4 million (approx. 13.2% of total imports) in 2018 from an annual average of USD 598.8 million (approx. 15.5% of total exports) from 2015 to 2017[28]. These are very high levels of intra-regional trade given that the COMESA average intra-regional imports level was 6.5% of total imports in 2018[29]. The COMESA intra-regional imports, meaning total imports amongst COMESA countries, as a share of total imports from the world increased only from an average of 5.5% from 2015 to 2017[30].
Zimbabwe maintains a persistent merchandise trade deficit in COMESA which decreased to a deficit of -USD 388.7 million in 2018 (2015-’17: -USD 396.3 million). Hence, there is significant room to increase Zimbabwe’s exports to COMESA countries. This would make Zimbabwe’s intra-regional trade balance in COMESA more equitable.
The top-five exports from Zimbabwe to the SADC are nickel ores, tobacco, gold, pig iron and metallic ores, which constituted 35.9% of total exports in 2018 (2015-‘17: 36.8% of total exports)[31]. The value of the top-five exports from Zimbabwe to SADC increased to USD 1.5 billion in 2018 from an annual average of USD 1.2 billion from 2015 to 2017[32].
The value of total exports from Zimbabwe to the SADC increased to USD 2.0 billion (approx. 49.6% of total exports) in 2018 from an average of USD 1.7 billion (approx. 51.3% of total exports)[33]. These are very high levels of intra-regional trade given that the SADC average intra-regional exports level was 17.9% of total exports in 2018. The SADC intra-regional exports, meaning total exports amongst SADC countries, as a share of total exports to the world decreased from an average of 20.8% from 2015 to 2017[34].
Zimbabwe’s top-five imports from SADC are electricity, petroleum, animal feed, fertilisers and commercial vehicles. These imports are critical diversified inputs and they constituted 14.7% of total imports to Zimbabwe in 2018 (2015-‘17: 11.1% of total imports)[35]. The value of the top-five imports from SADC to Zimbabwe increased to USD 604.1 million in 2018 from an annual average of USD 426.5 million from 2015 to 2017[36].
Table 2: SADC Regional Trade for Zimbabwe (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
The value of Zimbabwe’s total imports from SADC increased to USD 2.9 billion (approx. 69.7% of total imports) in 2018 from an annual average of USD 2.6 billion (approx. 68.0% of total exports) from 2015 to 2017[37]. These are very high levels of intra-regional trade given that the SADC average intra-regional imports level was 20.9% of total imports in 2018[38]. The SADC intra-regional imports, meaning total imports amongst SADC countries, as a share of total imports from the world increased only from an average of 20.7% from 2015 to 2017[39]. Given Zimbabwe’s balance of merchandise trade in the region, there is room to decrease its imports from SADC countries.
Zimbabwe maintains a persistent merchandise trade deficit in SADC which increased to a deficit of -USD 855.5 million in 2018 (2015-’17: -USD 909.8 million). Zimbabwe is quite reliant on the SADC for its imports and there is significant room to increase its exports to COMESA countries. This would make Zimbabwe’s intra-regional trade balance in COMESA and SADC more equitable.
In addition, Zimbabwe might want to reassess the balance of benefits to its COMESA and SADC membership given that it received greater benefit from COMESA on the account of its relatively more favourable merchandise trade balance. Therefore, there is room to rebalance the Zimbabwe’s imports towards COMESA and increase Zimbabwe’s exports to COMESA countries. This would also improve Zimbabwe’s intra-regional trade with COMESA and make the intra-regional trade balance in both regions more equitable.
[1] UNCTAD 2019. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: https://unctadstat.unctad.org/ [Last Accessed: 26 September 2019].
[2] UNCTAD 2019. UNCTADStat Database, ibid.
[3] UNCTAD 2019. UNCTADStat Database, ibid.
[4] IMF 2019a. Zimbabwe Staff-Monitored Program, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 15 October 2019]; IMF 2017. Zimbabwe 2017 Article IV Report, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 15 October 2019].
[5] IMF 2019a. Zimbabwe Staff-Monitored Program, ibid.
[6] IMF 2019a. Zimbabwe Staff-Monitored Program, ibid.
[7] RBZ 2014. Press Statement on the Unveiling of Bond Coins Issued by Dr J P Mangudya, Governor, Reserve Bank of Zimbabwe, Reserve Bank of Zimbabwe: Harare. Available At: https://www.rbz.co.zw/ [Last Accessed: 15 October 2019]; RBZ 2016. Press Statement on the Introduction of Bond Notes, Reserve Bank of Zimbabwe: Harare. Available At: https://www.rbz.co.zw/ [Last Accessed: 15 October 2019].
[8] RBZ 2015. Press Statement Demonetization of the Zimbabwe Dollar, Reserve Bank of Zimbabwe: Harare. Available At: https://www.rbz.co.zw/ [Last Accessed: 15 October 2019].
[9] IMF 2019a. Zimbabwe Staff-Monitored Program, ibid.; PESA 2017. 2017 Political Economy Outlook: Zimbabwe, on the Political Economy Southern Africa Website, viewed on 15 October 2019, from https://politicaleconomy.org.za/.
[10] RBZ 2019a. Statutory Instrument 33 of 2019 , Reserve Bank of Zimbabwe: Harare. Available At: https://www.rbz.co.zw/ [Last Accessed: 15 October 2019]; RBZ 2019b. Press Statement on Strengthening the Interbank Foreign Exchange Market, Reserve Bank of Zimbabwe: Harare. Available At: https://www.rbz.co.zw/ [Last Accessed: 15 October 2019].
[11] IMF 2019a. Zimbabwe Staff-Monitored Program, ibid.
[12] IMF 2019a. Zimbabwe Staff-Monitored Program, ibid.
[13] IMF 2019a. Zimbabwe Staff-Monitored Program, ibid.; IMF 2017. Zimbabwe 2017 Article IV Report, ibid.
[14] IMF 2019a. Zimbabwe Staff-Monitored Program, ibid.
[15] IMF 2019a. Zimbabwe Staff-Monitored Program, ibid.
[16] RW 2017. Southern and Eastern African Countries Agree on Urgent Actions to Tackle Armyworm and Other Crop Pests and Animal Diseases, on the ReliefWeb Website, viewed on 15 October 2019, from https://reliefweb.int/.
[17] RW n.d. Southern Africa: Drought – Nov 2018, on the ReliefWeb Website, viewed on 10 October 2019, from https://reliefweb.int/.
[18] IMF 2019b. IMF Primary Commodity Prices, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 4 October 2019].
[19] IMF 2019b. IMF Primary Commodity Prices, ibid.
[20] IMF 2019b. IMF Primary Commodity Prices, ibid.
[21] UNCTAD 2019. UNCTADStat Database, ibid.
[22] UNCTAD 2019. UNCTADStat Database, ibid.
[23] UNCTAD 2019. UNCTADStat Database, ibid.
[24] UNCTAD 2019. UNCTADStat Database, ibid.
[25] UNCTAD 2019. UNCTADStat Database, ibid.
[26] UNCTAD 2019. UNCTADStat Database, ibid.
[27] UNCTAD 2019. UNCTADStat Database, ibid.
[28] UNCTAD 2019. UNCTADStat Database, ibid.
[29] UNCTAD 2019. UNCTADStat Database, ibid.
[30] UNCTAD 2019. UNCTADStat Database, ibid.
[31] UNCTAD 2019. UNCTADStat Database, ibid.
[32] UNCTAD 2019. UNCTADStat Database, ibid.
[33] UNCTAD 2019. UNCTADStat Database, ibid.
[34] UNCTAD 2019. UNCTADStat Database, ibid.
[35] UNCTAD 2019. UNCTADStat Database, ibid.
[36] UNCTAD 2019. UNCTADStat Database, ibid.
[37] UNCTAD 2019. UNCTADStat Database, ibid.
[38] UNCTAD 2019. UNCTADStat Database, ibid.
[39] UNCTAD 2019. UNCTADStat Database, ibid.
