Trade deficit at a 17-month high

HARARE – Zimbabwe reported a decline in exports and an upsurge in imports for the month of May 2022 resulting in the highest trade deficit in 18 months, latest data from Zimstat show.

The import bill could be a result of global price increases in commodities such as fuel, wheat, and soya bean among others.

Total exports for the month of May amounted to US$513 million while imports amounted to US$714,5 million.

This resulted in a trade deficit of US$201,3 million, the highest since January 2021 when it hit US$245,5 million.

A trade deficit is neither inherently entirely good nor bad. Initially, a trade deficit is not necessarily a bad thing. But over time, a trade deficit has effects on the economy which are outsourcing jobs and falling economy.

The main export drivers for the period under review were semi-manufactured gold (32.3 percent), nickel ores and concentrates (23.2 percent), nickel mattes including platinum group of minerals (PGMs) (16,1 percent), ferrochromium (8,3 percent) tobacco (4,2 percent), platinum unwrought or in powder form (3.0 percent), semi-coke of coal (2,2 percent), chromium ores and concentrates (1,4 percent) and industrial diamonds (1,1 percent).

In terms of value, the country exported semi-manufactured gold valued at US$165,9 million, compared to US$176,9 million in April, 2022.

During the same period, the country exported 575,0 tonnes of nickel mattes valued at US$82,6 million, compared to 1,150.1 tonnes valued at US$133,9 million in April 2022.

Besides the major minerals usually exported, Zimbabwe also exported 4 kilogrammes of industrial diamonds valued at US$5,9 million in May 2022, compared to 103 kilogrammes valued at US$29,2 million in April, 2022.

South Africa remained Zimbabwe’s major trading partner.
During the period under review, exports to South Africa were 47,1 percent compared to 40,6 percent in April 2022.

The import bill of US$714,5 million was, however, the highest this year, with major imports remaining mineral fuels and mineral oil products which stood at 19.2 percent in May 2022, compared to 22.1 percent in April 2022.

This was followed by machinery and equipment at 16.1 percent in May 2022. Other imports in May 2022 included vehicles (7.0 percent), electrical machinery (5.5 percent), plastics (5.4 percent), fertilisers (4.6 percent), animal and vegetable oils and fats (4.4 percent), cereals mostly rice (3.0 percent), pharmaceuticals (3.0 percent) and paper and paper products (1.9 percent).

Notably, major imports in Zimbabwe were aggregated to reach 92.4 percent in May 2022, Zimstat said.
The proportion of imports from South Africa was 42.8 percent in May 2022, compared to 43.8 percent in April 2022.

Considering a huge chunk of the import bill is made up of fuels and mineral oil products, it can be argued that the country’s trade deficit is not necessarily bad. Fuels and oils increase the standards of living of Zimbabweans by making the availability of a product through imports that cannot be produced in the domestic market. Increased importation of plants and equipment also means the country will in the future be able to produce some imported goods locally as well as create jobs.

Also, trade deficits can mean the country was able to avoid shortages of goods following a poor farming season that was affected by erratic rains.

However, a trade deficit might also mean the country is outsourcing jobs at the expense of locals. This could lead to layoffs and falling demand for goods and services. – Business Weekly

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