Zim trade deficit widens

HARARE - Zimbabwe's huge trade deficit continues to widen driven by low exports and a growing consumptive import bill, despite a legislative piece recently introduced by government to curb the import of locally available goods.

Information released by the Zimbabwe statistical agency (Zimstat) shows that the country’s trade deficit widened from $1,6 billion recorded in July to close in August 2016 at $1,8 billion.

This was after the country exported goods valued at $1,5 billion after importing merchandise worth $3,3 billion.

While market watchers expected August’s imports to be low on the back of government’s Statutory Instrument 64 of 2016 gazetted on June 20, data from Zimstat indicated the country is heavily dependent on imports.

The imports ban, which removed basics from the Open General Import License and caused regional trade friction, did not affect South Africa’s position as Zimbabwe’s biggest trading partner in August.

In the period under review, South Africa remained the country’s largest trading partner after Zimbabwe exported goods worth $1,1 billion to its neighbour and imported products valued at $1,3 billion.

Notable export destinations in June apart from South Africa were the United Arab Emirates which received goods worth $2,2 million from Zimbabwe down from $2,8 million recorded in July and Mozambique which purchased merchandise worth $29,7 million up from $20,8 million.

Minerals continued to dominate the top-performing exports as consumables made up a huge part of the country’s imports.

Zimbabwe is a significant producer of gold, platinum, diamonds, coal and nickel with major miners such as Anglo American Platinum, Impala Platinum, and Mzi Khumalo’s Metallon Gold having established huge operations here.

The top export in June was semi-manufactured gold (including gold plated with platinum) which earned the country about $56,1 million down from $88,3 million in July.

Market watchers say the ballooning deficit highlights a policymaker’s nightmare being experienced by Zimbabwe’s policy proponents in boosting trade at a time the country is experiencing one of its worst economic crises.
Zimbabwe, which has been led by President Robert Mugabe since 1980, is currently experiencing a liquidity crisis, rising protests, drought, company closures and electricity shortages among other things.

Economic experts contend the widening trade deficit was worrisome at a time when exports should be the main driver for economic growth.

As part of strategies to stem the widening trade deficit, Industry minister Mike Bimha in June gazetted regulations aimed at stimulating exports, which should be the main driver for economic growth.

According to Statutory Instrument 64 of 2016, it is now illegal to import items such as baked beans, potato crisps, cereals, bottled water, mayonnaise, salad cream, peanut butter, jams, maheu, canned fruits and vegetables, pizza base, yoghurts, flavoured milks, dairy juice blends, ice-creams, cultured milk and cheese.

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