Trade deficit narrows 22pc
Zimbabwe’s trade deficit for the fourth quarter of 2018 narrowed 22 percent to US$499 million from US$577,9 million recorded in the previous quarter, although the value of imports continued to outstrip value of exports. The country’s imports are mostly made up of raw materials for industrial processing.
Figures from the Reserve Bank of Zimbabwe show that the country imported goods worth US$1,79 billion in the last quarter of 2018, from $1,72 billion recorded during the previous quarter.
This was against exports that came in at US$1, 29 billion, representing an increase of 12 percent from the $1,14 billion worth of exports recorded in the third quarter of 2018.
However, the growth in exports was not enough to offset the ballooning import bill.
Zimbabwe’s merchandise trade stood at US$3,08 billion in the fourth quarter up 7,6 percent from US$2,87 billion in the previous quarter.
“A comparison of total merchandise trade for the fourth quarters of 2017 and 2018 shows that it increased by 12,7 percent, from US$2,74 billion in the fourth quarter of 2017 to US$3,08 billion in the fourth quarter of 2018.
“Merchandise exports increased by 13 percent, from US$1,14 billion realised in the third quarter of 2018 to US$1,29 billion in the fourth quarter. The increase was largely underpinned by the increase in exports of flue-cured tobacco,” said RBZ.
During the fourth quarter of 2018, the country’s exports were mainly destined for South Africa, accounting for about 63,5 percent of total exports, followed by the United Arab Emirates (9,3 percent) and Mozambique (9,3 percent).
The country’s export basket continued to be dominated by primary commodities in particular gold, flue-cured tobacco, nickel, ferrochrome, chrome and industrial diamonds, contributing about 80 percent of the total exports.
However, merchandise imports increased 19 percent mainly driven by imports of diesel petrol wheat crude soya and fertilisers
“Total merchandise imports increased by 18,9 percent, to close at US$1,79 billion, during the fourth quarter of 2018. This compares with the total import bill of US$1,51 billion, recorded during the comparative period in 2017.
“The country’s import bill was mainly composed of diesel, petrol, wheat, crude soya bean oil and fertilisers. Notably, diesel and petrol imports collectively constituted about 25 percent of total imports, during the period under review.
“On a quarter-on-quarter basis, merchandise imports increased by 4,1 percent to US$1,79 billion in the fourth quarter of 2018, from US$1,72 billion in the third quarter. The increase was largely underpinned by higher imports of diesel, petrol and fertilisers, during the period under review,” said the central bank.
Zimbabwe has been experiencing trade deficits due to a decline in exports, usually unprocessed items such as tobacco and minerals, and a ballooning import bill, mainly for consumptive goods. The country is a net importer of fuel and capital goods. The firming United States dollar has also made Zimbabwe’s products more expensive and exports to the region uncompetitive.
Analysts say the trade deficit experienced last year shows the economy has less competitive exports relative to the region partly as a result of operating with a firm US dollar.