ADB report on imports

Zimbabwe should work on reducing imports and increasing exports for the economy to start experiencing notable growth, the African Development Bank (ADB) has said.

“High growth rate of imports, against a sluggish growth of exports is not favourable for the recovery process of the economy,” said ADB in its monthly economic assessment report.

By the end of September Zimbabwe had exported goods worth $3,2 billion against imports worth $6,2 billion. ADB said the current trade situation would soon become a serious challenge.

“The trade balance structure remains a potential challenge to the management of the current account,” said ADB.

Most of the imports found in Zimbabwe are from neighbouring South Africa and China. This is a result of the country’s failure to recapitalize industries, most of which have shut down in Bulawayo.

A $40 million dollar fund has been set aside to recapitalize closed companies in Bulawayo. The imports increased particularly in August because the country was preparing for the plating season.

“The widening trade balance in August is attributed to imports which increased by 142% from $517.9 million in July 2011, to $1,254.6 million in August 2011 on account of increased fertilizer imports from South Africa ahead of the forthcoming farming season. The widening trade balance continues to exert adverse pressure on the sustainability of the current account, particularly on the back of depressed capital inflows,” reads the report.

Zimbabwe, once the breadbasket of the SADC region, this week received a $300 million loan from Brazil. Loan officials have said it will finance agriculture and boost crop production.

Agriculture is one of the key industries in Zimbabwe’s economic turnaround strategy. The government believes that this year agriculture will experience a 33 percent growth.

Other sectors such as tobacco farming have been experiencing notable growth, despite falling short of the government’s projections for this year.

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