Economy

Trade deficit narrows

TAURAI MANGUDHLA

Zimbabwe’s trade deficit for the first two months of 2020 has narrowed
42.5% to US$76.4m compared to the same period prior year as the
country’s foreign currency shortages hinder imports, coupled with a jump
in exports.


According to Zimstat’s latest figures, exports went up 18% to US$762.5m while imports grew by 8.3% to US$838.9m.


The bulk of imports comprised of fuel, electricity, and maize while
major exports remained tobacco and mineral produce, in particular gold,
platinum, and nickel. By country, South Africa accounted for the
highest exports and imports.


Zimbabwe National Chamber of Commerce CEO, Chris Mugaga
said the figures can, however, not be relied on due to corruption and
smuggling in the country.


Mugaga, however, said the trade deficit narrowed also due to import
compression.


“With the unavailability of foreign currency becoming even worse, it
became difficult to source goods from outside Zimbabwe,” Mugaga
said, adding the trade figures are not a sign of a growing economy,
but rather an economy starved of foreign currency and in the process
the import bill had no choice except to decline.


With both corruption and poverty reaching unprecedented levels, we
won’t be shocked that the figures which we are getting from customs
can no longer be relied on.”


He added: “We have seen vehicles being smuggled into the country and
with poverty grinding some customs officials line their pockets. Most
goods are coming into the country unaccounted for hence reducing the
import bill on paper but feeding the ever-growing informal economy.”


Analyst Batanai Matsika said the narrowing trade deficit is largely a
result of geopolitical risks which have helped in terms of boosting gold
prices, thereby pushing upwards the value of exports.


Gold and tobacco are Zimbabwe’s top foreign currency earners.
Matsika also said at 8%, imports have not increased much compared
to last year given persisting foreign currency constraints.
He said industry capacity utilisation remains low, an indication
export growth should not be much.


The impact of Covid-19 on Zimbabwe’s trade is expected to
be mirrored starting from March figures with the most impact in April
and May where the country was on full lockdown except for essential
services.

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