Zim’s export projections ambitious

LIVINGSTONE MARUFU

Zimbabwe is unlikely to meet its ambitious US$7.12bn export receipts projections  by  the year end  largely due to anticipated low global mineral commodity prices that will dominate  this second half  of the year.

Last year, Zimbabwe  made US$7bn in export revenue.

“There are downside risks to the current projections, particularly with regard to decline in international mineral commodity prices that could impact the mining sector, adverse weather conditions, as well as continued disruptions of international supply chains that could constrain global demand conditions,” outgoing Finance and Economic Development Minister, Mthuli Ncube said.

Following his election to a second term, President Emmerson Mnangagwa is yet to form a new government.

However, Ncube,  is expected to be a part of President Mnangagwa’s new administration.

“Commodity prices are expected to decline during 2023 in the face of slowing demand globally,” Ncube said.

He claimed that due to expected sharp declines in the prices of zinc and tin, metal prices are predicted to fall by 8.9% and 3.4%, respectively, in 2023 and 2024.

In contrast, precious mineral prices are anticipated to maintain their upward trend and are forecast to increase by 5.5% in 2023 as demand for gold as a safe haven rises amid increased uncertainty regarding future growth prospects, ongoing worries about global inflation, as well as the financial stress seen in the first quarter.

However, because prices are anticipated to drop to their pre-pandemic levels in 2024, there will be a 7.2% expected taper in the price of precious mineral commodities.

As a result of the weak performance of mineral exports, merchandise exports fell by 8.2% to US$3.19bn  in the first half of this year from US$3.48bn in the prior comparative period.

Mineral, which account for the largest component  of merchandise exports, declined by 12.5%, from US$2.90bn in the first half of 2022 to US$2.58bn during the period under review.

Exports fell after key commodity prices continued to soften, which was largely caused by dimming prospects for global growth.

As a result of the export of tobacco, the nation’s agricultural exports increased by 15.9% to US$463.5m  in 2023 from US$399.9m  in the first half of 2022.

Horticultural exports were, however, muted because of the lingering effects of higher input costs for labour, fuel, fertilizer, chemicals, and packaging as well as higher fuel prices in 2022.

Manufacturing exports increased by 7.6%, from US$180.6m  in the first half of 2022 to US$193.84m  in the same period of 2023, primarily due to rising tobacco cigarette exports.

According to John Mangudya, governor of the Reserve Bank of Zimbabwe, manufactured exports continue to suffer from low competitiveness, which is caused by high production and market development costs as well as outdated machinery.

On the other hand, he stated that increases in the imports of grain, fuel, machinery, and electricity are expected to push merchandise imports to close the year at US$8.34bn, a 2.6% increase from US$8.13bn in 2022.

The current account balance is estimated to have narrowed to a surplus of US$38.3m  in the first half of 2023, compared to a surplus of US$397.9 m  for the same period in 2022.

“This followed a more significant trade deficit, as exports contracted, while imports increased. The current account was further weighed down by services and a primary income account that also registered the deficits.

“Remittances and other transfers (secondary income flows), however, remained resilient, thereby offsetting the deficits in the services and primary income accounts.This, notwithstanding, the estimated current account balance is projected to strengthen in the second half of the year on account of projected bullish tobacco, gold and lithium export performance and resilient diaspora remittances,” Mangudya said.