Zim forex earnings rise, driven by exports and remittances

Zimbabwe’s foreign currency receipts saw a significant increase in the first half of 2024, driven by a surge in export earnings and diaspora remittances, according to the Reserve Bank of Zimbabwe (RBZ) in its Mid-Term Monetary Policy Statement released today.

The central bank reported a 9.5 percent rise in foreign currency receipts, reaching US$6.15 billion compared to US$5.61 billion in the same period of 2023.

This positive trend is attributed primarily to growth in export receipts and international money transfers.

“Export receipts and international money transfers accounted for 55 percent and 25 percent, respectively, of the country’s total receipts during the period from January 1 to June 30, 2024,” the statement noted.

Export Diversification Boosts Earnings

The statement highlighted a positive shift in the export landscape, with diversification playing a key role.

“Merchandise exports increased by 3.4 percent, driven by increased exports of gold, agricultural commodities, and manufactured products,” the RBZ stated.

Gold exports, in particular, witnessed a 14.6 percent increase, reaching US$970.4 million compared to US$846.6 million in the first half of 2023. This growth is attributed to rising global gold prices fueled by safe-haven demand amidst global economic uncertainties.

Challenges and Opportunities in the Mining Sector

While gold exports thrived, the statement acknowledged challenges faced by other minerals. “The performance of the country’s platinum group metals (PGMs) exports has been erratic,” it said. Although platinum prices remained stable, declines in palladium and rhodium prices hampered overall earnings. Diversifying the country’s mineral exports while maintaining the competitiveness of key minerals was emphasized as a strategic priority.

Lithium, a critical element in the clean energy transition, saw significant investment inflows but also a marginal decline in exports due to declining global prices.

Despite the El Niño-induced drought impacting the 2023/24 agricultural season, agricultural exports defied expectations, rising by 29 percent. This increase was driven by growth in tobacco, horticulture, and crocodile products.

Manufactured exports also witnessed a positive trend, increasing by 7.8 percent. However, the statement acknowledged persistent challenges, including high production costs and outdated technologies, that continue to hinder the overall competitiveness of the sector.

Food imports Rise Due to Drought

Merchandise imports, a natural consequence of an expanding economy, increased by 4.1 percent. Food imports, particularly maize, saw a significant spike of 58.1 percent due to the drought.

Diaspora remittances contribute to positive current account

Personal transfers, primarily remittances from the diaspora, saw a significant increase of 16.5 percent, contributing favorably to the country’s current account balance.

“Reflecting the observed improvement in foreign currency receipts, preliminary estimates indicate that the current account balance recorded a surplus of US$19.2 million in the first half of 2024, a turnaround from the deficit of US$13.8 million observed in the same period last year,” the statement concluded.

Analyst Walter Mandeya said the RBZ’s Mid-Term Monetary Policy Statement paints a picture of a Zimbabwean economy displaying resilience in the face of global uncertainties.

“While challenges remain in the mining and manufacturing sectors, the increase in foreign currency receipts through export diversification and robust diaspora remittances provides a positive outlook for the country’s economic stability,” he said.-ebsinessweekl