Trade deficit surpasses 2017 levels

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ZIMBABWE’s cumulative trade deficit in the eight months to August 2018 increased to $1,84 billion from $1,74 billion recorded in the year to December 2017, latest data shows.
The southern African country has persistently run a trade deficit since dollarisation in 2009, amid indications that the cumulative trade deficit in the past nine year has since breached $20 billion.
Figures released by the Zimbabwe National Statistics Agency (Zimstat) this week indicated that the country imported goods and services worth $577 million during the month of August against exports of $449 million.
This means that the country’s cumulative trade deficit grew by $127 million during that month and now stands at $1,84 billion.
The trade gap has widened by 37 percent, compared to a deficit of $1,34 billion accrued during the same period last year.
This comes as the competitiveness of local industry has been deteriorating under subdued economic conditions in the country over the past two decades. Government, however, says the economy is picking up with more progress expected in the near future.
“The economy is showing signs of recovery albeit with a number of challenges and risks. Indications are that, the economy will grow by 6,3 percent against the original budget projection of 4,5 percent and 4,8 percent estimated for 2017. With this projected growth Zimbabwe will join the ‘six percent club’ of African countries growing at more than six percent per annum,” Finance minister Mthuli Ncube said in his fiscal measures statement last week.
“However, the quality of the growth, which is primarily being driven by two sectors of agriculture and mining is obviously not inclusive,” he added.
Mining and agriculture have remained the country’s major exporting sectors contributing more than 90 percent of the country’s exports in August, with gold exports of $159 million contributing 35 percent while nickel and tobacco contributed 22 percent and 18 percent, in that order.
The widening trade deficit contrasts sharply with government’s efforts to encourage exports, which have included the introduction of various export incentive schemes.
ZimTrade, the country’s export promotion body, has cited export permits requirements as one of the major impediments for export business, apart from the prevailing economic conditions which have crippled industry.
Meanwhile, Zimstat says the persistent trade deficit has been magnified by unstated foreign trade activity.
“Trade deficit says that you are importing things that cost more than your export earnings, the question is who is funding that difference,” Douglas Hoto, a Zimstat board member told delegates at the Institute of Internal Auditors Zimbabwe annual conference recently.
“We can try to account for it by saying there is FDI, diaspora remittances and so on but when you add these things together, there is still a gap which speaks to a section of the economy that is not accounted for when we do our national accounts.
“It simply means that the significant part of the economy is not in the equation or the exports are understated to the extent that they go out in the grey market and comeback as imports in the formal market,” said Hoto.
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