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Zimbabwe's trade deficit widens by 28%
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Zimbabwe's trade deficit ballooned to US$543 million in the first quarter of 2025, marking a 28% increase from the US$424 million recorded during the same period last year, according to the latest figures from the Zimbabwe National Statistics Agency (Zimstat).
The sharp rise in the deficit was fuelled by a 6.8% surge in imports, which climbed to US$2.29 billion, while exports edged up by only 1.5%, reaching US$1.75 billion compared to US$1.72 billion in the first quarter of 2024.
Imports were dominated by fuel, electricity, and essential manufactured goods, reflecting the country's ongoing struggles with domestic production shortfalls and persistent power outages.
South Africa remained Zimbabwe's top import partner, followed by China, the Bahamas, Mozambique, and the United Arab Emirates (UAE).
In contrast, exports were largely concentrated in raw minerals, with gold and other commodities making up the bulk of shipments to markets including the UAE, China, and South Africa. However, falling global commodity prices and the country's limited capacity for value addition curbed more substantial growth in export revenues.
Economic analysts warn that the widening trade gap could place additional strain on Zimbabwe's already fragile foreign currency reserves and hinder efforts to stabilise the local currency.
"The 28% year-on-year increase in trade deficit represents a concerning structural deterioration," said Stevenson Dhlamini, a research fellow at the Public Policy and Research Institute of Zimbabwe.
"Import growth significantly outpaced export growth, with a 5.3 percentage point difference. This indicates a weakening trade position and further pressure on forex reserves."
Economist Trust Chikohora added that global headwinds, including trade tensions and a broader slowdown in international markets, were compounding the challenge.
"The global economy is under strain, and this has hurt demand for key commodities," he said. "Minerals, which are crucial to Zimbabwe's export base, are particularly affected as global manufacturing slows down."
Chikohora also pointed to domestic challenges, including electricity shortages exacerbated by last year's El Niño-induced drought and operational setbacks at Hwange Power Station, which have forced the country to ramp up power imports.
"Importing electricity and other basics like maize, following previous harvest shortfalls, has inflated the import bill. Meanwhile, high business costs and infrastructure deficits are hampering export competitiveness," he noted.
Both economists called for urgent policy interventions to address the structural trade imbalance, including boosting local production, diversifying exports, investing in value addition, and creating a more conducive environment for both domestic and foreign investors.
Without corrective measures, they cautioned, the trade deficit is likely to continue widening, worsening macroeconomic imbalances and undermining economic recovery efforts.
The sharp rise in the deficit was fuelled by a 6.8% surge in imports, which climbed to US$2.29 billion, while exports edged up by only 1.5%, reaching US$1.75 billion compared to US$1.72 billion in the first quarter of 2024.
Imports were dominated by fuel, electricity, and essential manufactured goods, reflecting the country's ongoing struggles with domestic production shortfalls and persistent power outages.
South Africa remained Zimbabwe's top import partner, followed by China, the Bahamas, Mozambique, and the United Arab Emirates (UAE).
In contrast, exports were largely concentrated in raw minerals, with gold and other commodities making up the bulk of shipments to markets including the UAE, China, and South Africa. However, falling global commodity prices and the country's limited capacity for value addition curbed more substantial growth in export revenues.
Economic analysts warn that the widening trade gap could place additional strain on Zimbabwe's already fragile foreign currency reserves and hinder efforts to stabilise the local currency.
"The 28% year-on-year increase in trade deficit represents a concerning structural deterioration," said Stevenson Dhlamini, a research fellow at the Public Policy and Research Institute of Zimbabwe.
"Import growth significantly outpaced export growth, with a 5.3 percentage point difference. This indicates a weakening trade position and further pressure on forex reserves."
Economist Trust Chikohora added that global headwinds, including trade tensions and a broader slowdown in international markets, were compounding the challenge.
"The global economy is under strain, and this has hurt demand for key commodities," he said. "Minerals, which are crucial to Zimbabwe's export base, are particularly affected as global manufacturing slows down."
Chikohora also pointed to domestic challenges, including electricity shortages exacerbated by last year's El Niño-induced drought and operational setbacks at Hwange Power Station, which have forced the country to ramp up power imports.
"Importing electricity and other basics like maize, following previous harvest shortfalls, has inflated the import bill. Meanwhile, high business costs and infrastructure deficits are hampering export competitiveness," he noted.
Both economists called for urgent policy interventions to address the structural trade imbalance, including boosting local production, diversifying exports, investing in value addition, and creating a more conducive environment for both domestic and foreign investors.
Without corrective measures, they cautioned, the trade deficit is likely to continue widening, worsening macroeconomic imbalances and undermining economic recovery efforts.
Source - newsday
