Zim trade deficit on the increase

HARARE - Zimbabwe's trade deficit widened to $2,6 billion in the 10 months to October 2015, as the country’s economy continues to slide into recession in the absence of strong economic reforms.

Latest figures released by the Zimbabwe Statistical Agency (Zimstat) yesterday showed that the country imported goods worth $4,6 billion between January and October this year while exports amounted to $2 billion. 

Economic experts say the latest statistics prove that it would require good leadership to revive Zimbabwean industries that are choking from intense competition from cheap imports. The country’s  trade deficit stood at $1,83 billion in the first six months of this year.

According to Zimstat, top source countries for the imports included South Africa, China, Singapore, United Arab Emirates, Botswana, United Kingdom, India, Japan and Mozambique.

In the period under review, Zimbabwe imported goods valued at $1,817 billion from South Africa and exported $1,3 billion to its neighbour, while the country exported $1,3 million goods to china and imported $370 million worth of goods from the Asian country.

Major imports included dried fish, fresh water, milk and other related dairy products, crude oil, fuel, electrical energy, steel products and vehicle accessories.

The country’s major exports were minerals and a wide range of agriculture-related products such as tobacco, tea and horticulture products.

Zimbabwe’s trade deficit continues to grow as the local industry’s struggles continue, functioning below 35 percent of capacity, incapacitated by lack of funding for retooling and unreliable power supply.

In an effort to reduce the widening trade deficit and protecting local industries from cheap imports, in his mid-term fiscal review Finance minister Patrick Chinamasa increased customs duties and surtax on selected products.

“Over-reliance on imports is not all related to production of un-competitively priced goods,” he said adding that cheap and low quality imports, in particular, were creating an uneven playing field and, hence, suppressing the full recovery of a number of local firms.

“Over and above this, the emergence of vending of cheap, low quality and smuggled imports is further choking both our producers and retailers, in addition to limiting inflows into the fiscus,” the Treasury chief added.

Chinamasa noted that there was need for the country, which has been experiencing recurrent trade deficit in the past few years, to have confidence in locally-made products as a way of reviving industry.

“Resuscitation of our local industries will also immensely benefit from public preferential support through developing appetite for locally-produced goods and services.

“The switching from consumption of imported products to local, should not compromise quality and competitiveness on the part of domestic producers,” he said.

However, economic experts say the trade deficit will continue to widen in the absence of strong economic reforms and a stimulus package to industry.

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