eBusiness Weekly
Tapiwanashe Mangwiro
With increased global food inflation and a rapidly weakening currency, coupled by a forecasted fall in commodity prices, the country faces a longer spell of widening monthly trade deficits.
Zimbabwe’s monthly trade deficit widened by 303 percent to US$201,4 million at the end of May 2022. The decline came as a result of a 31 percent decline in monthly exports to US$513,1 million and a 12 percent rise in monthly imports to US$714,5 million.
The export earnings for the month saw the total receipts for 2022 reach US$2,6 billion which is 31 percent up from the 2021 comparable period. Over the same period, imports have increased by 18 percent to US$3,3 billion.
Trade deficit for the five-month period stood at US$689 million, which was a moderate improvement from US$803,9 million in the comparable 2021 period.
Gold remained the country’s main export, with receipts totalling US$165,9 million at the end of May. Nickel mattes and ores were the next major sources of earnings at US$82 million and US$119 million respectively. Tobacco was the highest earning non-mineral export with US$21,9 million.
The country appears to be reaping the benefits of the soaring commodity prices with mining commodity sales making up 80 percent of total export revenues in the five months to May 2022.
In that same period the country earned US$795,3 million from gold exports, which was 103 percent higher than the comparable 2021 period. Gold spot prices peaked at US$2 048 per ounce in March 2022, but have since fallen to US$1 700.
The outlook for gold prices is unclear, with a large emphasis on the decisions that will be made by the federal reserve to stem US dollar inflation.
In terms of imports, the country spent US$111,2 million on fuel during May 2022, which was a 6 percent decline for April 2022. Monthly soya bean oil imports increased by 81 percent to US$23,9 million and imports of medicines increased by 24 percent to US$17,97 million.
So far in 2022, the country has imported US$504,28 million of fuels which is a 15 percent rise from the comparable period. Given that crude oil prices increased by 53 percent between December 2021 and May 2022, the trade statistics suggest the country is currently consuming less fuel.
Neighbouring South Africa remained Zimbabwe’s largest trading partner. Monthly imports from the southern neighbour stood at US$305 million and exports reached US$241 million. In total Zimbabwe imported US$1,4 billion of goods from South Africa in 2022, which was a 13 percent rise from the comparable 2021 period.
In the same time exports to South Africa increased by 15 percent to US$504,3 million. As a result, the trade deficit widened by 14 percent to US$917 million. The trade statistics indicate that trade ties with Mozambique have been on the rise, with the eastern neighbour now both a major import and export market.
Mauritius has become a major trading partner, with total imports from the island nation reaching US$155 million at the end of May.
Looking ahead, the country’s dependency on mining commodities could be a boon or a bust depending on how the global economy shapes up. Gold usually does well in times of high economic uncertainty, but the outlook for industrial metals such as nickel and ferro-chrome would be less positive.
Beyond that, expectations are for increased maize and wheat imports to cover the expected grain deficit. Overall, rising food and energy prices, and diminished local capacity will likely keep Zimbabwe’s trade in deficit.
