Trade deficit ticks up

LATEST statistics from the Zimbabwe National Statistics Agency (ZimStat) show that the country’s trade deficit during the 11 months to November 30, 2018 increased to $2,36 billion from $1,5 billion in the comparable period in 2017.
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 has breached $20 billion.
Finance minister Mthuli Ncube has said the trade gap is one of the major challenges facing the country in its quest for economic recovery after decades of economic problems.
Data released by ZimStat last week shows that the country imported goods and services worth $629 million during the month of November against exports of $472 million, adding $157 million to the trade gap.
This puts the cumulative imports for the 11 month-period at $6,29 billion, with exports lagging at $3,93 billion.
Meanwhile, the country’s gold exports in November, which amounted to $47 million, down from $110 million in November 2017, were the lowest recorded over the past 23 months. This comes as local deliveries have been subdued, with the market responding to recent policy changes implemented by government.
In October 2018, government introduced a two percent tax on electronic funds transfer at about the same time that it separated “FCA Nostro” accounts from “RTGS FCA” accounts, which represent electronic balances of what some analysts have called ‘virtual money’.
Analysts say the impact of these changes along with other rapid reforms made by government recently have caused a slump in deliveries of the yellow metal.
Fidelity Printers and Refiners’ records show that local gold deliveries slumped from 3,9 tonnes in August to 1,4 tonnes in November.
Consequently, foreign currency shortages have worsened over the past six months in the country, which had predominantly relied on mineral exports.
The country however regrettably does not have any apparent short-term solutions to compensate for the losses from subdued gold deliveries.
“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 of Zimbabwe’s top 10 export products by value are commodities,” a local advisory firm, Equity Axis, said in a commentary recently.
The latest data shows that energy imports have continued to dominate the country’s trade accounts, with the cumulative import bill for diesel and petrol for February to November coming in at $1,4 billion, representing more than a quarter of the country’s imports during that period.
Figures for January figures for the year were not provided. The narrowest trade gap achieved since 2009 was in 2017 at $1,8 billion.
This was on the backdrop of increased import controls and foreign currency rationing, coupled with a cocktail of local industry support measures.
newsdesk@fingaz.co