The decline in export and import performance is a reflection of the overall slowdown in economic activities.
THE country’s trade deficit narrowed 10 percent to US$1,82 billion in the eight months to August from US$2,02 billion in the same year ago period largely on the back of lower imports.
According to latest data from Zimbabwe National Statistics Agency (Zimstat) for the eight-month period, imports dropped to US$3,32 billion from US$3,53 billion in the comparable period largely due to a number of factors which include troubles in the external payment systems, import restrictions placed on selected products by Government and weak industry demand for raw materials.
A trade deficit, which is also referred to as net exports, is an economic condition that occurs when a country is importing more goods than it is exporting. The deficit equals the value of goods being imported minus the value of goods being exported, and it is given in the currency of the country in question.
Weakness in the South African rand, whose country is the biggest trading partner, has also contributed with the rand trading at 14,11 against the dollar in August vs August 2015:13.29); subdued international oil prices and waning domestic demand due to reduced Government spending (priority mostly being given to salaries and servicing treasury bills maturities).
According to the Reserve Bank of Zimbabwe, a combination of foreign currency management measures, including the prioritization of imports and restrictions on selected imports by the Ministry of Industry and Commerce in July 2016, as well as the effects of a stronger US$ on the country’s terms of trade are expected to lead to a 0,9 percent decline in the import bill in 2016.
Food imports (maize and wheat) are, however, expected to surge owing to the El Nino induced drought that ravaged the Southern African region, including Zimbabwe.
Exports on the other hand, were near flat at US$1,507 billion from US$1,51 billion last year Generally, manufacturing sector’s export performance between 2014 and 2015 indicates that the sector’s capacity to export is declining.
In addition, the process of obtaining export documentation (permits/licences) and achieving export compliance makes it cumbersome to export.
The challenge with the permits is not only their cost but also the time it takes to process them, which in itself is a higher cost.
Overall, the decline in export and import performance is a reflection of the overall slowdown in economic activity, emanating from the drought induced contraction in agriculture, depressed commodity prices particularly platinum, suppressed capacity utilisation in the manufacturing sector, as well as continued difficulties in accessing external lines of credit.
On a month on month basis the country’s trade deficit closed August at US$241,2 million from US$316,2 million last year. Imports in August amounted to US$443,9 million while exports were US$202,6 million.
For the eight-month period, Zimbabwe’s top imports remained fuels and agro-based raw materials. Wheat imports were at US$59,5 million, maize imports at US$177,1 million (August 2015: US$93,2 million), crude soya bean oil at US$71,1 million from US$61,5 million last year, unleaded petrol at US$271,3 million and diesel at US$515 million against US$560,6 million last year.
On exports, flue-cured tobacco amounted to US$309,7 million, industrial diamonds US$78,7 million, gold at US$503,3 million, nickel ore concentrates US$180,7 million. The Source
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