Chronicle Editor
Harare Bureau
ZIMBABWE’S Diaspora remittances defied a projected slowdown in inflows due to the Covid-19 pandemic to hit record levels of about US$1 billion in 2020.
This has greatly contributed to the country’s resilience to regional and global trade shocks, said the World Bank in its latest Zimbabwe Economic Update.
On account of the improved remittances inflows, Zimbabwe managed to record a current account surplus. The current account records the value of exports and imports of both goods and services and international transfers of capital.
“Despite trade disruptions and the sharp decline in global economic activity caused by the pandemic, Zimbabwe’s current account remained in surplus at 5,3 percent in 2020,” said the World Bank.
“A key driver of the surplus was remittances in 2020, which saw a growth of 58 percent. The increase in formal remittances may reflect the shift to greater use of official channels for remittance delivery due to the pandemic.”
Although the pandemic-driven trade disruptions induced a negative impact on Zimbabwe’s foreign currency generation, the country’s imports were significantly reduced. Authorities have, for years, been fighting importation of ‘non-essential’ goods.
“Adjustment of trade started in April 2020, when the Government and neighbouring countries initiated pandemic containment measures affecting domestic and cross-border movement of goods and people,” said the Bretton Woods institution.
“Trade disruptions were more pronounced on imports than on exports, but imports rebounded more quickly, growing by four percent in nominal terms on the account of higher demand for maize and other grains, fertiliser, and electricity – as a result of the persistent drought.”
Fuel imports, however, dropped by 51,1 percent year-on-year in response to successive lockdowns, weakening economic activity and loss of disposable incomes.
Exports on one hand grew by 2,7 percent, driven by platinum, nickel, and diamond with traditional key export commodities like tobacco, gold and chromium declining in 2020, it added.
Meanwhile, with Zimbabwe (and most countries) still dealing with the “third wave” of the health pandemic, the threats to the performance of the current account are still potent.
And indications are that they may have been worsened by the recent violent protests in South Africa, which is Zimbabwe’s biggest trading partner and a vital part of trade routes into the region and into international markets.
Online Reporter