Trade deficit soars to US$500m as production slumps
ZIMBABWE’S trade deficit increased by 16% to US$500 million during the first half of this year due to low productivity, economic instability experienced in the country, as well as the outbreak of Covid-19 which disrupted the movement of goods, official statistics show.
Latest figures from the Zimbabwe National Statistics Agency (ZimStat) show that between January and June this year, the country exported goods and services worth US$2.52 billion against imports of US$3.02 billion, giving a trade deficit of US$500 million.
During the corresponding period last year, exports stood at US$1.86 billion with imports at US$2.30 billion, resulting in the country experiencing a negative trade balance of US$432.9 million.
In the period under review, imports increased by 31%, while exports increased by 35%.
Zimbabwe’s major imports, according to ZimStat, were in the machinery and mechanical appliances category, which stood at 13.5% in June 2021.
This was followed by the mineral fuels and mineral oils products category at 11.2% in June compared to 12.5% in May 2021. Cereal imports, including maize continuously dropped from a peak of 9.1% in February 2021 to 5.6% in May and 4.1% in June 2021.
In 2021, maize imports rose from 5.7% in January to 7.1 % in February before declining to 1.9% in May, and further to 0.03% in June.
Other major imports in June 2021 included fertilizers, vehicles, animal and vegetable fats and pharmaceutical products, including vaccines.
Notably, the major imports in Zimbabwe were aggregated to reach 90.8% in June 2021.
In order to strengthen the country’s export earning capacity, ZimStat said it is vital to look closely at export drivers.
June 2021 data shows that Zimbabwe’s main exports were semi-manufactured gold at 28.2%, nickel mattes, including platinum group of minerals (PGMs) 23.2%, nickel ores and concentrates 20.4%, platinum unwrought or in powder form 3.9% and tobacco 3.6%.
“It was noted that major minerals produced in the country such as nickel concentrates and nickel mattes were exported in a semi-processed form, while nickel ores (including PGMs) are exported in a raw form,” ZimStat said.
One of the challenges of relying on primary product exports is that the country might run out of its finite primary products. For example, precious metals could become scarce. Without diversification, this would leave the economy with a void.
In his 2021 mid-term budget and economic review, Finance minister Mthuli Ncube (pictured) said the current account balance for 2021 is projected to remain in a surplus position, albeit at a moderated level of US$611.6 million compared to US$1. 096 billion recorded in 2020.
Merchandise exports are projected to increase by 4.2% to US$5.13 billion while mineral exports are expected to maintain strong growth on account of the continued strong performances in platinum group of metals (PGMs) and recovery in chrome and high carbon ferrochrome exports.
Gold exports are forecast to remain high in 2021, on account of the recently introduced gold delivery incentives.
Agricultural exports, led by tobacco, are expected to positively respond to the favourable climatic conditions during the 2020-2021 agricultural season while manufactured exports are similarly expected to rebound, spurred by the anticipated recovery in production.
Merchandise imports are projected to increase by 11.1% to US$5 245.7 million, driven by increases in fuel, machinery and raw material imports. Food imports will, however, be lower on account of reduced maize imports, following a good 2020/21 agricultural season.