Impacts of Fluctuating Commodity Prices on Government Revenue in the SADC Region: The Case of Platinum for Zimbabwe
The commodity sector plays a significant role in Zimbabwe, accounting for an average of 19.9 percent of GDP, 50.7 percent of merchandise exports, about 36.2 percent of total formal sector employment and at least 5 percent of total government tax revenue over the period 2009 to 2016. However, commodity prices are relatively volatile compared to prices of manufactured products. The volatility of commodity prices not only complicates the saving and investment decisions of households and businesses but also makes it more difficult for government authorities to develop spending and tax policies that are designed to boost inclusive economic growth and alleviate poverty. Zimbabwe is endowed with vast deposits of mineral resources, but their extraction has not translated into the desired growth. This policy brief gives an assessment of the trends, drivers and implications of fluctuating platinum prices on government revenue, economic growth and social investment in Zimbabwe. Recommendations to Zimbabwe are given.