Import duty suspension widens trade deficit

THE country’s trade deficit grew by 29 percent to US$196,8 million in May 2023 from US$152,6 million in April this year, a trend that has been attributed to the recent scrapping of import duty on basic commodities.

According to the Zimbabwe National Statistics Agency (ZimStats) director general, Mr Taguma Mahonde, total imports for the month of May were up by 20,2 percent to US$851 million from US$708 million in April.

ZimStats

Economic experts have attributed the widening trade deficit to the recent suspension of duty for basic goods, which was adopted by the Government to try and stabilise the economy amid price escalation and thereby increase the availability of basic commodities to ordinary people.

Trade deficit occurs when the country’s imports value exceeds the value of exports.

Presenting the monthly trade updates on Monday, Mr Mahonde said while exports were up by 17,8 percent to US$654,2 million from US$555,5 million, the margin of increase was lower when compared to imports.

“In May 2023, main imports by broad economic category were industrial imports constituting 26,4 percent, capital goods 22,9 percent, and fuels, and lubricants 22,2 percent,” said Mr Mahonde.

He said the main exports by broad economic category were industrial supplies at 91,1 percent and fuels and lubricants accounting for 3,2 percent.

Lupane State University

Among the main products exported were semi-manufactured gold at 24 percent and nickel mattes at 18,3 percent. Commenting on the trade trends, Lupane State University business clinic development manager, Mr George Nhepera said importation of raw materials and machinery and equipment was also contributing to an increase in imports resulting in an increase in trade deficit.

“As a country, we need to create an export-led economy so that we harness significant inflows of foreign currency to support exchange rate stability, economic growth, and job creation in our country,” he said.

“The most important asset that our people have is labour or human capital, which must be deployed in decent work for the good of the country.”

In line with the National Export Strategy, which was launched in 2019, Zimbabwe has set a target of reaping US$6,26 billion in exports of goods and US$651 million from services each year.-chronicl.c.zw