HomeLocal NewsZim’s US$3bn trade deficit worsens

Zim’s US$3bn trade deficit worsens

ZIMBABWE’S total imports for January 2015 stood at US$538 million, an increase of about 10% from US$487 million recorded during the same month last year, worsening the country’s alarming US$3,3 billion current account deficit, which is 23,9% of Gross Domestic Product.

Hazel Ndebele

Trade statistics by the Zimbabwe National Statistics Agency (Zimstat) for the month of January this year show an increase in imports as exports continue to decline compared to the same period last year.

Zimbabwe’s trade deficit was US$2,9 billion last year and is projected to narrow by 2% to US$2,8 billion this year.
According to Zimstat, total exports for January 2015 stood at US$267 million, a US$11 million decrease from last year’s US$278 million.

There are concerns this is an indication that the import bill — which reflects a collapse of local production as the economy further nosedives — could increasing throughout 2015.

Among other shockers, Zimstat revealed the country is spending over US$1 million per month to import toilet paper as well as other types of paper such as newsprint and cigarette paper.

Major contributors of the January import bill are food, fuel, medicines, clothing, building material, motor vehicles and motor vehicle parts, capital goods and fertiliser.

According to the Ministry of Industry and Commerce, the manufacturing sector contributes significantly to gross domestic output, export earnings and employment. Moreover, it has strong linkages with other sectors of the economy particularly, agriculture, mining services and construction.

However, the country has over the years seen a decline in the manufacturing sector with capacity utilisation declining from 57,2% in 2011 to 36,3% last year, with most industries shutting down resulting in rising unemployment and a significant increase on the import bill.

Economic analyst John Robertson said the import bill is expected to increase this year and trade deficit to worsen.

“Revenues from exporting gold and platinum have gone down and are unlikely to increase, therefore our exports will possibly decrease further as the currency we are using (United States dollar) is getting stronger than that of our trading partners,” said Robertson.

“On the other hand, our imports are largely paid for by Zimbabweans in the diaspora who send goods to their relatives, which is why the import bill is ballooning. The rise in the import bill is also merely showing the effects of the land reform programme; many farms which were re-allocated but used to produce a lot are now lying idle which is partly why we have to rely on imports.”

Another economic analyst Takunda Mugaga said the situation could be worse.

“The statistics could be worse than that as Zimbabwe has become a trader’s market whereby everyone imports in order to be in business with many not declaring the goods they bring into the country,” he said.

“There is no doubt the trend of having more imports to exports will continue. The cost of production is too high locally and quality has deteriorated; which is why almost everyone in business settles for imports.”

South Africa is Zimbabwe’s biggest trading partner with the latter exporting and importing most goods and services from the former.

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