ZIMBABWE’S trade deficit widened by 44% to US$399.9 million during the first four months of this year, putting into doubt the government’s projection that balance of trade will remain positive in 2021.
DUMISANI NYONI
Latest data from the Zimbabwe National Statistics Agency (ZimStat) shows that between January and April this year, the country exported goods and services worth US$1.5 billion against imports of US$1.9 billion, giving a trade deficit of US$399.9 million.
During the corresponding period last year, exports stood at US$1.2 billion with imports at US$1.5 million, resulting in the country experiencing a negative trade balance of US$278 billion.
The widening trade deficit, according to analysts, is mainly attributed to the economic instability experienced in Zimbabwe, the outbreak of Covid-19 which disrupted the movement of goods and the volatility of the South African rand to the US dollar.
In his 2021 national budget, Finance minister Mthuli Ncube projected the current account to remain positive despite vulnerabilities in the global economy, driven by continued recovery of exports and imports, coupled with an increase in remittances and efficient foreign exchange market auction system, which prioritise allocating foreign currency to industry raw materials, rather than consumptive goods.
Ncube said the growth in exports will be driven mainly by increased production and productivity riding on a stable domestic macro-economic environment.
Imports are projected to grow in line with the re-opening of the economy and attendant growth pressures, he said.
However, with the country recording a negative trade balance of nearly US$400 million within four months, Ncube’s projections remain in doubt.
In the period under review, Zimbabwe’s export was dominated by primary commodities, with nickel ores and concentrates accounting for US$367 million, nickel mattes (US$329m), gold (US$313.4m), tobacco (US$121.8m), ferro-chromium (US$89.8m), platinum (US$69m) and diamonds at US$63.3m.
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.
The bulk of the country’s imports in the period under review remained heavily skewed towards consumptive products, which comprise fuel, wheat, medicines and vehicles.
For instance, fuel gobbled US$109.9 million, crude soyabean oil (US$56 million), electricity (US$39.9 million) and maize (US$99.9 million).
To generate export orders for Zimbabwean products and establish new supply-chains that will work to increase the country’s exports, the country’s export promotion body, ZimTrade, will deploy an outward mission to South Africa in August this year.
South Africa is Zimbabwe’s largest trading partner.
“The outward mission will accommodate 20 export-ready Zimbabwean companies and SMEs (small and medium enterprises) in sectors that include agricultural implements and inputs, building and construction, protective clothing, engineering, processed foods and beverages,” ZimTrade said in a recent statement.
“While there is a need to diversify export markets to minimise trade risks, it is important to continue to harness the export potential in South Africa, leaning on the country’s advanced development.”
