Zimbabwe suffers US$300m trade deficit

ZIMBABWE suffered a US$300 million trade deficit during the first quarter of 2021, as imports continued to dominate the value of goods exported by the country, data from the Ministry of Finance and Economic Development showed this week.

In its first quarter economic bulletin released on Monday, the ministry said Zimbabwe imported goods worth US$1,4 billion during the period, and exported goods worth US$1,1 billion.

Trade deficit, which occurs when a country's imports exceed exports during a given time, has haunted Zimbabwe for many years as its industries struggle to produce and export higher volumes compared to an avalanche of goods flowing from other countries. The result has been prolonged foreign currency shortages, which militate against efforts to turnaround the economy.

"The country exported goods worth US$1,1 billion during the first quarter, a 5% increase from US$1 billion, recorded during the same period last year," the ministry said.

"Mineral exports dominated in the top 20 export products at 84%, with nickel ores and mates, ferrochromium, industrial diamonds, platinum and coal products registering growth. On the downside were gold, flue-cured tobacco and other tobacco products. The country's exports were mainly destined to South Africa absorbing 34%, followed by UAE and Mozambique, absorbing 23% and 10%, respectively, while the rest of the world imported 33% of our products. Similarly, merchandise imports increased by 12% to US$1,4 billion from US$1,3 billion realised during the same period last year. Compared to the fourth quarter of 2020, imports fell by 4% from US$1,5 billion," said the report.

However, while Zimbabwe's exports trailed imports, they increased by 5% during the period under review, driven by an 84% growth in mineral exports.

The report said Zimbabwe's import basket was dominated by crude soya bean oil, fertilisers, medicaments and wheat.

Mineral exports have increased since world markets reopened this year, with governments relaxing Covid-19 lockdown regulations. The data showed that exports rose to US$1,1 billion during the period from US$1 billion previously.

It said increased demand for fertiliser was driven by favourable rainfall received during the 2020/21 season, with urea and ammonium nitrate registering significant increases. It said the Covid-19 pandemic drove demand for medicaments and personal protective equipment since the virus broke out in 2020.

"Imports for maize, which have been on the rise due the last two consecutive droughts, are coming down, as the country is expecting a bumper harvest. Similarly, fuel imports declined sharply during the period under review, mainly from lockdown measures and depressed economic activity," it said.

The report said during the first quarter, the Reserve Bank of Zimbabwe conducted 12 foreign currency auctions, with a total US$424,8 million being allotted at an average exchange rate of 83,47%. It said the central bank's auction system had allotted US$359,6 million during the previous quarter, at an average rate of 81,6%.

"Raw materials absorbed 44% of the total allotments, while machinery and equipment absorbed 17%, consumables 9%, retail and distribution and energy absorbed 8%, respectively and other priority lists absorbed 14%," the bulletin said.