New data from the Zimbabwe Statistical Agency (Zimstat) found that the impoverished African nation imported more than $2 billion worth of goods, while exporting just $948 million so far this year. The country now has a trade deficit of $1.122 billion.
In a bid to protect local industries and lower this trade deficit, the Zimbabwe government has decided to impose a ban on the importation of a large number of basic commodities and products. Economists are already warning that local businesses will likely take advantage of this by charging customers higher prices.
According to Industry Deputy Minister Mike Bimha, the import ban will include bottled water, soap, electronics, smartphones, used vehicles, clothing, coffee creamers, pizza base, body creams and the list goes on. It’s even going as far as prohibiting the import of beds, shoe polish, woven fabrics of cotton and doors.
Zimbabwe mostly exports beef, tobacco and scrap metal. By imposing an import ban, Zimbabwe believes it can stimulate exports and shield local businesses from global competition.
A local columnist praised the decision, arguing that such a ban is needed in Zimbabwe.
“As the economy continues to recover, there is a need for the government, in consultation with industry, to take stock and see areas to institute controls through various instruments available to it so that the recovery is consolidated.”
But is having a trade deficit really such a bad thing? Here is what the legendary economist Walt Williams writes:
Let’s look at the political angst over trade deficits. A trade deficit is when people in one country buy more from another country than the other country’s people buy from them. There cannot be a trade deficit in a true economic sense. Let’s examine this.
I buy more from my grocer than he buys from me. That means I have a trade deficit with my grocer. My grocer buys more from his wholesaler than his wholesaler buys from him. But there is really no trade imbalance, whether my grocer is down the street, in Canada or, God forbid, in China.
Here is what happens: When I purchase $100 worth of groceries, my goods account (groceries) rises, but my capital account (money) falls by $100. For my grocer, it is the opposite. His goods account falls by $100, but his capital account rises by $100. Looking at only the goods account, we would see trade deficits, but if we included the capital accounts, we would see a trade balance. That is true whether we are talking about domestic trade or we are talking about foreign trade.
The nation’s major trading partners including China, South Africa, the United States, the United Kingdom and Germany.
It’s time that Zimbabwe goes through a revolution, by ousting the Zanu-PF and President Robert Mugabe, a self-proclaimed Marxist. The once affluent nation is now a shell of its former self thanks to socialist and racist policies implemented by Mugabe.
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