“This is testament to the fact that there is something positive happening in the country, and since the Minister of Finance (Professor Mthuli Ncube) came into office, prudent economic policies have been put in place. We, however, need to look at ways to further increase the gap in the positive direction, as it translates to more domestic production, which also means more jobs and a bigger local market.”
New York-headquartered global ratings firm Fitch Solutions says Zimbabwe will most likely record a third consecutive current account surplus this year for the first time since 2009.
Economists opine that this trend translates to increased local production and job creation.
“At Fitch Solutions, we anticipate that Zimbabwe will realise a current account surplus, although it will narrow from 3 percent of GDP in 2022 to 2,2 percent of GDP in 2023,” the ratings firm said in a recent report.
The ratings firm believes the surplus would narrow owing to a combination of strong import demand in the run-up to this year’s harmonised elections and weak global commodity prices.
However, consumer spending is expected to remain strong.
“We believe that consumer spending will be relatively strong in 2023 in the run-up to mid-year elections, which will keep import demand robust and lead to a narrower current account surplus,” it adds.
While it is expected that nominal import growth will slow marginally in 2023, this will chiefly reflect lower global commodity prices rather than weaker underlying import demand.
Average crude oil prices, which rose markedly last year on the back of the Russian-Ukraine war, are projected to drop by 6,9 percent over the course of 2023.
This is expected to reduce the country’s import bill.
Fuel accounted for 15,6 percent of imports into Zimbabwe in 2021.
Prices of nickel – one of the key exports – are also forecast to drop by 7,2 percent this year after rising 31,3 percent in 2022.
Analysts do not expect gold prices to increase this year, marking two straight years of stagnant prices.
“Accordingly, we believe that the Zimbabwean export sector will be dealt a heavy blow by stagnant gold prices and receding nickel prices, resulting in less revenue,” Fitch Solutions added.
Overall, the economy will continue growing.
Treasury is projecting a 3,8 percent growth this year.
Economist Professor Tony Hawkins said: “This is testament to the fact that there is something positive happening in the country, and since the Minister of Finance (Professor Mthuli Ncube) came into office, prudent economic policies have been put in place.
“We, however, need to look at ways to further increase the gap in the positive direction, as it translates to more domestic production, which also means more jobs and a bigger local market.”
The local economy, which has successfully transitioned from recovery to growth, has been on a strong growth trajectory characterised by rising production across various sectors.
In the dairy sector, for example, milk production rose to 83,1 million litres in the January-November period last year, against a year-end target of 90 million litres.
Players in the sector were optimistic the target would be met.
Economist Dr Prosper Chitambara said the increase in milk output would likely reduce the country’s import bill.
“We are using a lot of foreign currency importing milk powders to augment our supply, so, such a development will do us much good,” he said.
Zimbabwe also recorded its biggest-ever wheat harvest last year, at 380 000 tonnes, which is 20 000 tonnes more than the country’s annual demand.
This represents a record haul since commercial production of the cereal began in 1962.
Government plans to further increase output to 420 000 tonnes this year.
Economic analyst Mr Gerald Amon is upbeat about the country’s prospects going forward.
“With such a trade off on revenue (exports) and expenses (imports), you will see that it is only logical to say the country will continue to be in the black. We need to continue pushing local production in order to continue seeing such rewards,” he said. – The Sunday Mail
