Zim trade imbalance could be understated

Zim trade imbalance could be understated
Published: 10 March 2014
Zimbabwe's trade deficit could be significantly understated in view of indications by a World Bank study that partner countries have reported much lower import figures from the country.

The report entitled "The Opportunities and Constraints for Stronger Regional and Global Integration of Zimbabwe" notes that the level of exports reported by Zimbabwe does not correspond with figures given by partner countries.

Reads a section of the report: "A wide discrepancy exists between Zimbabwean reported trade flows and those by its trading partners. The discrepancy is greatest for Zimbabwe reported exports. The level, trend and geographic composition of exports reported by Zimbabwe do not correspond closely with imports reported by partner countries.

"In 2013, for example, Zimbabwean reported exports at $3,5 billion exceed reported imports from Zimbabwe by 66 percent ($2,1 billion)."

Official figures from the Zimbabwe National Statistical Agency show that Zimbabwe's trade imbalance stood at $4,2 billion up from the 2012 figure of $3,6 billion. This was after the country had registered total imports of $7,7 billion and total exports of $3,5 billion in 2013.

However, if indeed Zimbabwe's exports are 66 percent lower than reported, then the trade deficit could be at least $5,6 billion.

To worsen matters, the study also suggests that a "significant" amount of Zimbabwe's exports could be re-exports.

According to United Nations Comtrade, "re-exports" are exports of foreign goods in the same state as previously imported, they are to be included in the country exports.

"A final concern regarding the trade data is that exports from Zimbabwe may include re-exports. Given Zimbabwe's role as a transit country to Malawi, Zambia and Democratic Republic of Congo, the share of re-exports in total exports may be significant," says the study.

Zimbabwe has been experiencing a protracted trade deficit largely due to a low manufacturing base and as such low competitiveness.

Economic analysts maintain that trade imbalances can be sustainable and even persist for several years without necessarily leading to a crisis. However, the problem with Zimbabwe's situation is that the country has a fragile national balance sheet.

This means that the country cannot really enhance its revenues from exports, hence cannot fund projects aimed at boosting supply-side supports.
- BH24
Tags: Trade,


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