Oliver Kazunga
ZIMBABWE’S trade deficit widened by six percent to US$2,1 billion last year largely driven by the El Nino-induced drought and depressed commodity prices on the international market.
According to the latest trade statistics released by the Zimbabwe National Statistics Agency (Zimstat) this week, last year the country exported US$7,44 billion worth of goods while imports were valued at US$9,53 billion and thus showing a trade deficit of US$2,1 billion.
In 2023, Zimbabwe’s trade deficit stood at US$1,98 billion as the country exported goods worth US$7,23 billion against imports valued at US$9,21 billion.
In separate interviews, economic analysts attributed the broadening of trade deficit to the El-Nino induced drought, which meant that Zimbabwe had to import more food, particularly maize from around the globe as well as electricity due to low water levels at Lake Kariba for hydropower generation.
“Given the drought that Zimbabwe experienced last year, it was unanimous that the country was going to import food, particularly maize.
“Moreso, due to low water levels at Lake Kariba, hydropower generation at Kariba was also affected due to insignificant water levels.
“As a result, the country’s import bill on maize and electricity imports was bound to rise sharply.
“Although, Zimbabwe is endowed with minerals such as gold, platinum, nickel and diamond as well as lithium among others, because of the depressed commodity prices on the international market, the volume and value of mineral exports except for gold was adversely affected, thus significantly contributing to Zimbabwe’s trade deficit,” said Mercy Shumba.
On the back of the southern African region were hit by the El Nino-induced drought after the region received normal to below-normal rainfall in the 2023/24 rainy season, the Zambezi River Authority which administers water allocation for power generation at Kariba, set the average electricity generation at Kariba Power Station whose installed capacity is 1 050 megawatts (MW) at 214MW due to limited water in Lake Kariba.
In recent years, global metal prices except gold have remained depressed, ultimately impacting adversely on production of Platinum Group Metals as well as lithium, not only in Zimbabwe, but worldwide.
For example, the World Platinum Investment Council (WPIC) has indicated that the platinum market recorded a deficit of 878 000 ounces in 2023.
Total supply fell by two percent while demand spiked by 25 percent year-to-year, but this has failed to influence prices hikes.
Despite subdued commodity prices on the international market, the global demand for gold has been on the increase as the world was turning to the yellow metal as a safe haven asset to protect from economic and geopolitical issues.
Consequently, the price of gold on the world market increased remarkably from about US$1 900 per ounce in September 2023 to US$2 500 last year.
Going forward this year, the price of the yellow metal is forecast to reach US$2 900 per oz.
Zimstat indicated that last year, Zimbabwe’s gold export revenue was US$2,5 billion up from US$1,81 billion in 2023.
Last year, Zimbabwe’s platinum exports were US$103 million down from US$121 million in 2023.
Zimstat also revealed that last year the country imported electricity worth US$207,68 million compared to US$108,19 million in 2023.
Maize imports surged to US$602 million last year from US$149,5 million in 2023 — diesel imports reached US$1,02 billion last year from US$951 million in 2023 while US$444,4 million worth of petrol was imported down from US$448,85 million in 2023.
Another economist, Wendy Mpofu, echoed similar sentiments, adding that the broadening of the country’s trade deficit could also be attributed to the dual currency system.
“While it is largely clear that Zimbabwe’s trade deficit broadened due to increased reliance on imports on the back of a severe drought that has impacted agricultural exports and food availability, it is vitally important to also highlight that the operating environment in the country including the dual currency system, can harbour challenges for formal businesses and contribute to the widening trade deficit,” she said.
For December 2024, Zimstat said the country’s trade deficit was US$196,9 million, reflecting a 318,2 percent increase from the previous month’s rate of US$47,1 million.
“December 2024 exports amounted to US$692,4 million, a decrease of 23,5 percent (USD 212,8 million) from the November 2024 value of US$905,2 million.
“Imports for the month totalled US$889,3 million, which was 6,6 percent (US$63 million) less than the November 2024 imports of USD952,3 million,” said the agency.
“Among the top ten products exported in December 2024 were semi-manufactured gold, tobacco, partly or wholly stemmed/stripped, and nickel mattes, accounting for 42,2 percent, 22,7 percent and 8,8 percent of the total value of US$692,4 million, respectively.”
Mineral fuels, mineral oils and products, cereals, machinery and mechanical appliances, and vehicles were among the top ten imported products in December last year.
The products constituted 20,8 percent, 12,4 percent, 9,9 percent and 8,1 percent of the total import value of US$889,3 million, respectively.
