Trade deficit widens to $3bn

Minister Patrick Chinamasa

Minister Patrick Chinamasa

Brighton Gumbo Business Reporter
ZIMBABWE’S trade deficit widened to $3 billion in the first 11 months of last year compared to $2,97 billion recorded during the same period in 2014, official figures show.

According to the Zimbabwe National Statistical Agency, the country’s top trading partners in the period under review were South Africa, Singapore, Mozambique, China and Zambia.

South Africa remained the country’s biggest trading partner with imports, mainly food, from that country amounting to $1.9 billion during the period under review.

In the period, Zimbabwe’s exports amounted to $2.5 billion against $5.5 billion worth of imports which remained heavily slanted towards consumption.

Exports in the period under review were dominated by gold, tobacco, nickel and diamonds, while imports comprised mainly of fuel, medicines, maize and vehicles, among others.

Buy Zimbabwe chief economist Kipson Gundani said the trade deficit has been widened by the currency environment in the country and uncompetitiveness of the economy which has seen a growth in Zimbabwe’s appetite to import.

“The figure has been growing year in and year out largely as a result of the country’s appetite to import,” he said.

“There’re two major contributing factors to last year’s trade deficit.

“We’ve an issue on the supply side where we’ve huge costs that industry incurs for labour, power and other aspects and at the end of the day, the pricing of a finished product becomes more expensive than importing.

“The other issue we’ve is the currency environment. The country is using a hard currency, the United States dollar which isn’t competitive with other regional currencies.

“At the end of the day we find that the currency we’re using is a darling of imports more than locally produced goods.”

In the past, the country’s huge trade deficit has been largely attributed to over-reliance on foreign goods, most of which can be produced locally.

The goods include grains, foodstuffs, chemicals and pharmaceutical products, among others.

Presenting the 2016 national budget last year, Finance and Economic Development Minister Patrick Chinamasa said: “Furthermore, the continued depreciation of the rand against the US dollar has undermined the competitiveness of our exports”.

Meanwhile, the government has tightened the issuing of import permits to protect local industry against the influx of cheap imported manufactured products.

In the past six months, the Ministry of Industry and Commerce stopped issuing import permits and approval of such licences was now subject to availability of certain products on the local market and capacity of local industries to produce.

Pin It