eBusiness Weekly
Business Writer
The Zimbabwe trade deficit narrowed for the third consecutive month in April after starting the year at its highest level since March 2020.
The month of April saw both imports and exports falling from the previous month’s figures, but with the former falling the most to close the month at a trade deficit of US$45,2 million, the lowest so far in the year, but still higher than each of the last five months of 2020.
The previous months had seen trade deficit narrow from US$177,5 million in January, to US$111,1 million in February, and US$66,2 million in March.
According to the latest figures released by Zimbabwe National Statistics Agency (ZimStat) last week, exports slowed down in April to US$444,6 million down from US$461,8 million in March.
At the same time, imports were falling from a year-to-date high of $527,9 million in March to US$489,8 million in April.
For the four months to April, the country recorded a trade deficit of US$400 million, which is higher than the trade deficit of US$278 million recorded prior year comparative.
The previous four months to December 2020, also had a narrower trade deficit of just US$84,5 million.
Finance and Economic Development Minister Mthuli Ncube has in the past described the country’s trade deficit as one of the two “evils” affecting the country’s economy.
In his Transitional Stabilisation Programme (TSP), which ran between 2018 and 2020, Mthuli targeted to reduce the current account deficit, to less than 5 percent of GDP, consistent with the SADC Macro-Economic Convergence Target.
Government policies, in line with the TSP, saw the trade deficit for the first four months of the year narrow from more than US$700 million in 2017 to US$308 million in 2019 and a low of US$278 million in 2020.
If the upsurge in the trade deficit to US$400 million becomes the new trend, then authorities will have a reason to worry as the deficit tend to put pressure on the exchange rate.
High current account deficits tend to compromise the sustainability of the exchange rate as it manifests in foreign currency shortages.
While the official exchange rate has been stable and stood at $85,5 to US$1 at the last count this week, the parallel market is anything between 100 and 140.
On a positive note, the end of year deficit, which could amount to US$1,2 billion is still within the target of 5 percent of GDP.
The target is within reach as Zimbabwe expects reduced food imports in the year under review following a good agriculture season. From the expected harvest, deliveries to the national granary, Grain Marketing Board are expected to be 1,8 million tonnes of maize and 200 000 tonnes of traditional grains.
The food import bill for the first four months of the year includes US$120 million worth of maize and maize meal imports. Such products have since been banned from being imported as the country is poised to harvest enough to feed itself.
Other food items with significant imports include broken rice in bulk (US$24 million), crude soyabean oil (US$56 million), and durum wheat (US$24 million).
Other major imports include petrol (US$25 million), diesel (US$85 million) electricity (US$40 million), vaccines US$29 million, medicaments (US$53 million), fertilisers, and related products (US$114 million). On the export side, tobacco exports accounted for US$120 million, nickel ores (US$367 million), gold US$313 million, platinum (US$69 million), ferro-chromium (US$90 million), and nickel mates (US$329 million).
