South Africa is Zimbabwe’s largest trading partner, with trade between the two countries growing from R19.2bn in 2011 to R22.5bn last year — mostly in South Africa’s favour.
“Exports realised over the period January to December 2012 amounted to $3.8bn, which compares unfavourably with imports of $7.5bn,” Mr Gono said. “It doesn’t require rocket science toappreciate the fact that where a country is relying more and more on importation of finished products, particularly those that it can produce on its own, is on a path of self-destruction and deindustrialisation.”
Mr Gono, who presented the central bank’s monetary policy statement last week, painted a grim picture of the country’s economic state that reflected low exports, limited foreign direct investment and weak international commodity prices. The affected minerals included platinum, copper and diamonds.
Zimbabwe relies heavily on minerals for revenue generation.
Analysts have said the stalled economic growth was an indictment of the four-year-old unity government that has been fraught with political bickering and economic policy inconsistency.
Zimbabwe’s trade deficit stands at $3.6bn and its manufacturing industry is reeling under the weight of imports from South Africa, which account for 65% of the total into the economy. As a result, industry capacity utilisation declined from 57% in 2011 to slightly under 44% last year.
According to the industry and commerce ministry, Zimbabwe’s industry requires about $2bn for re-capitalisation after being decimated by hyperinflation in 2008.
Economics professor at the University of Zimbabwe Tony Hawkins said the economy was characterised by excess consumption spending by the private sector and the state, negligible savings, and an unsustainable balance of payments position.
The country’s overall balance of payments remains in deficit and stood at $498m last year. Zimbabwe is further saddled with a $10bn debt. It owed the World Bank $1.2bn, the African Development Bank $500m, the International Monetary Fund $200m and the Paris Club of Creditors $3bn, among many others.
Trevor Maisiri, a senior analyst based at the Johannesburg office of the International Crisis Group, said yesterday that goods from South Africa would continue to flood the Zimbabwean market because they were cheaper. The Zimbabwean manufacturing sector is in decline and unable to meet local demand.
“Zimbabwe will need to resolve the current liquidity challenges, high interest rates, low volumes of capital and restrictive capital sources ,” Mr Maisiri said. “However, these challenges are not merely operational, (they ) are structural and dependent on the overall political and economic landscape .” BDLive