In its Zimbabwe Monthly Economic Review for October, the bank noted that over the period January to September 2011, provisional data indicates that exports amounted to US$3 153,40 million while imports raked in US$6 265,27 million.
“This resulted in a cumulative trade balance of US$3 111,88 million over the period of review.
“On a monthly basis, however, the trade balance declined from US$872,49 million in August 2011 to US$508,84 million in September 2011,” said the AfDB in a statement.
Under the government’s Medium-Term Plan (MTP), the country’s current account improvement is premised on both exports growth in response to investment and GDP growth.
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“Exports are forecast to increase at a faster rate than growth in the rest of the economy reflecting dominance of the mining sector,” reads the MTP document.
The MTP also targets a current account deficit of not more than 5% of GDP by 2015.
“The trade balance structure remains a potential challenge to the management of the current account,” said the AfDB.
Government expects the current account deficit to improve from US$1,6 billion in 2011 to US$1,2 billion in 2012.
Although the AfDB commended Zimbabwe’s improved economic governance, based on the Finance ministry’s budget strategy paper (BSP), Government Works Programme and the Medium-Term Plan, experts contend that the business environment needs to be transformed in order to pursue export-led growth.
Following years of protracted political wrangling among the leading parties, which led to negative ripple effects on the economy, Zimbabwe’s manufacturing sector experienced an unprecedented slump in production levels resulting in massive corrosion of the export sector’s performance.
Over 95% of the country’s mining sector output is exported, but the AfDB notes that the general trend shows that the indigenisation law was negatively impacting on the performance of the stock market and the economy in general.
However, under the BSP, domestic capacity utilisation is projected to increase to 60% and in the process reduce the high quantities of imports, with particular emphasis on basic commodities.
Food imports are expected to decline by 31,1% under the BSP.
Finance minister Tendai Biti re-introduced import duty on basic commodities such as maize meal and cooking in a bid to improve local industrial capacity utilisation as well as to stimulate local production of stock-feed.
Duty on salt, flour and rice remains suspended until December this year.
The BSP also projects an improvement in the balance of payments position from a deficit of US$789,7 million in 2011 to a deficit of US$438,2 million in 2012 on account of growth in exports and reduced imports.
