Zimbabwe’s trade deficit hits $2 billion

ZIMBABWE’s trade deficit during the 10 months to October 30, 2018 reached $2,2 billion, against a shortfall of $1,6 billion during the same period the previous year, data from the central bank and Zimbabwe National Statistics Agency (ZimStat) has shown.
The southern African country has persistently run trade deficits since dollarisation in 2009, recording only a single monthly trade surplus over the period. Official data shows that the country’s cumulative trade shortfall since 2009 amounted to over $20 billion.
Trade data released by ZimStat recently showed that the country imported goods and services worth $593 million during the month of October against exports of $449 million, adding $144 million to the trade gap for the 10 months.
This puts the imports for the 10 month-period at $5,66 billion, with exports lagging at $3,46 billion, resulting, in a $2,2 billion deficit.
“This unpleasing statistic in trade shows an economy with less competitive exports relative to the region partly as a result of operating with a firmer US dollar as well as structural high operating costs,” Equity Axis, a local research firm, said in a commentary recently.
The narrowest trade gap achieved since 2009 was $1,8 billion in 2017. This was on the backdrop of increased import controls and foreign currency rationing, coupled with a cocktail of local industry support measures.
“Most of these support measures are, however, stop gap and unsustainable, implying they cannot broadly address issues of competitiveness.
“Fundamental considerations such as optimal utility costs, fiscal consolidation and efficient production processes are key in addressing the local supply side concerns on a sustainable basis,” said Equity Axis.
Energy imports have continued to dominate the country’s trade, with the import bill for diesel, petrol and electricity for the period February to October coming in at $1,4 billion. Zimstats did not give figures for January. This represents more than a quarter of the country’s total imports during that period of $5,2 billion.
Minerals and tobacco continued to top the country’s exports during the same nine-month period, with exports of gold and the golden leaf accounting for more that 45 percent of exports from February to October.
“The bias towards minerals exports is likely to prevail at least in the foreseeable future due to Zimbabwe’s economic structure and lack of diverse productive and competitive base.
“Although government’s efforts to promote increased mineral exports are appreciated, value chains should be leveraged on, to spur economic growth and promote diversity. All top 10 export products by value are commodities,” Equity Axis said.
Official data shows that between 2009 and 2016 Zimbabwe recorded an average trade deficit of $3,28 billion a year. In 2011 which was the worst year, Zimbabwe recorded a trade deficit of $5 billion.
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