AS Zimbabwe grapples with cash shortages that have paralysed some business sectors, the country’s net external trading position has remained negative, both month-on-month in July and cumulatively year-on-year for the first seven months of the year, latest figures from the national statistics agency have shown.
Zimbabwe — a primary commodity producer — is also facing a deep fiscal crisis triggered by government’s over-borrowing not supported by growing revenues.
According to latest figures availed by Zimstat, the country’s gap for the month of July narrowed to US$218 million from US$230 million, but the external position remains precarious.
The trade deficit has resulted in the worst liquidity crisis since the country adopted the multi-currency regime in 2009.
Total exports for the month of July stood at US$264,1 million, which is 0,3% below the prior month’s outturn and the least performance in three months, as well as a below-average outturn on a year-to-date scale.
On average, the country has exported goods worth US$267 million a month between January and July. In the same period last year, average monthly exports were significantly lower at US$187 million, which shows a strong growth in that respective aggregate.
Total imports came in at US$482,1 million in July which is a 2,7% decline compared to June’s outturn. Between January and July, imports have realised a decline in three of the seven months while an average of US$445 million worth of goods were imported within the period per month.
Compared to the first seven months of the prior year, total cumulative imports have grown by 7%.
According to research, the narrowing of the gap is attributed to rising exports which came at a time the tobacco selling season was still on.
“Comparing the first seven months of the year to the same period year, the trade gap has narrowed by US$334 million, which is largely attributable to a quicker growth in exports which countered imports growth. A dissection of the trade data shows that imports have maintained a rising tally but exports have been rising faster after institution of various export promotion measures,” Equity Axis economist Tinashe Kaduwo said.
“The growing disparity shows that the country is chasing yet another moving target as imports keep rising despite the growth in exports. If remittances do not grow at a faster pace, it therefore implies that the deficit will be with us for much longer. Growth in remittances is discouraged by the currency disparity which promotes unregulated channels while it is a given that exports growth will largely be cyclical, subjective and limited to the mining sector given exports skew towards that sector.”
Official figures show that the composition of exports remained unchanged, reflecting that Zimbabwe is a primary producer.
“Driving imports in the month of July was energy demand which likewise is a common trait for the country. Diesel, petrol, electricity and aviation spirit were the most sought after imports in the month,” Kaduwo said.
“The country has been undertaking initiatives to increase own production of energy, especially electrical through alternatives such as hydro, solar and expansions of existing power stations. Aviation spirit demand has been slowly rising given the recent surge in local aviation players. Maize imports are gradually coming off as the local harvest picks pace. These developments are likely to impact positively on the import bill in the short term.”