Zimbabwe’s trade gap widens

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ZIMBABWE’S trade deficit ballooned to US$146 million in November, more than doubling from the previous month, as a sharp drop in exports outpaced a modest decline in imports.

The widening gap raises concerns about the country’s ability to finance essential imports and could dampen hopes for a sustained economic recovery.

Latest data released by the Zimbabwe National Statistical Agency (ZimStat) showed exports plunging 18,1 percent month-on-month to US$681,4 million, marking the second consecutive month of decline and dragging the cumulative export value for the year down by 8,2 percent compared to the same period in 2022.

Analysts attributed the export slump to a combination of factors, including subdued prices for some of Zimbabwe’s key mineral exports and the recent depreciation of the South African rand, a major trading partner.

“The decline in exports is worrying, especially since it comes at a time when the country is grappling with currency volatility,” said economic commentator Tendai Ngoma. “This could put further pressure on the Zimdollar and lead to higher inflation.”

Despite the decline in exports, imports edged down 8,3 percent month-on-month to US$827,3 million during the month. This was mainly driven by a dip in fuel imports due to lower global oil prices. “The widening trade deficit poses a significant challenge to the government’s efforts to stabilise the economy,” said Ngoma.

“It is crucial to implement policies that boost exports and attract foreign investment to narrow the gap and improve the country’s external account.” The government has recently introduced measures to boost exports, including a rebate scheme for manufacturers and exporters and a relaxation of foreign currency retention rules.

However, the effectiveness of these measures remains to be seen, and analysts warn that addressing structural constraints like poor infrastructure and an inconsistent business environment is essential for achieving sustainable export growth. With global economic headwinds and regional currency uncertainties persisting, the outlook for Zimbabwe’s trade balance remains fragile.

The government’s ability to narrow the gap and support economic recovery will hinge on its success in implementing targeted export-boosting measures and fostering a more conducive business environment.