Trade deficit widens as export stalwarts falter
Zimbabwe trade deficit for the five months to May has widened to US$970 million on the back of weaker export revenue in the period under review.
The deficit widened from US$660 million in the same period last year, representing a 46 percent increase in the trade difference. Exports topped US$2,59 billion in the period under review but were lower than US$2,64 billion received in 2022.
Imports topped US$3,56 billion in the year to May which was higher than the US$3,3 billion import bill at the same time in 2022.
Gold, which is one of the top foreign currency earners, generated US$652,75 million in the year to May which was US$142,25 million lower than the US$795 million generated in the same period last year.
This is due to lower than usual gold production as deliveries to Fidelity Gold Refiners came in 13,6 percent lower at 11,4 tonnes from 13,2 tonnes delivered in the first five months of 2022. This is despite the fact that gold prices have been 6 percent higher this year than the same period last year.
Analyst, Takudzwa Haparari added; “We saw a slower than usual start to our gold production in the year and despite high prices, it affected its revenue. Nickel has been seeing a fall in price from Covid-19 era highs so it also gets to bite us.”
Platinum export revenue for the five months to May 2023, was down US$13,1 million to US$61,9 million as prices are 16,22 percent down in the year to date, but 4 percent higher than the same period last year.
Economist, Tinevimbo Shava, commented that the country was suffering from such a problem because we export goods that we do not control their prices but we are price takers.
“Our main problem is the lack of beneficiation, which makes us exporters of world governed goods in terms of prices when we could be making much more. So when prices of some of these goods plummet, we see such a situation,” he said.
He added that the country needs to reduce some of the imports we make rather than further open our borders to everything that is sold out there.
Nickel and nickel mattes have also seen a decline in export revenue in the year to May, as compared to the same period in 2022. Nickel export revenue in the first five months of last year topped US$415,5 million but has come off US$67,7 million this year to US$347,8 million.
Nickel mattes have been one of the country’s top export earners in the past three years, and by May 2022, it had generated US$488,7 million but 12 months later it had generated US$426 million.
However, not all is gloom as tobacco, which surpassed the 260-million-kilogramme target set for this selling season, has been doing well on the export front. Export revenue from tobacco to May 2023 topped US$340 million, a positive US$24,2 million variance from the same period last year.
In total the five goods have realised US$261,55 million at US$1 828 million less than the US$2 090 million in the same period last year.
Economist Prof Tony Hawkins, believes there has been too much talk of beneficiation without actual action towards it and this is our greatest undoing.
“We just need to walk the talk on beneficiation and we are good, look at our tobacco, yes we get much export revenues but we could be making more if we were processing it into cigarettes and everything associated with it. So in short I am not shocked to see the situation that we are in,” he said.
Imports on the other hand have been on a steady increase with petrol and diesel costing the country US$6,5 million and US$6 million respectively. Wheat and maize import bill also increased by US$35,7 million and US$44,6 million respectively. This is due to an increase in imports for stock feeds and blending wheat which has seen prices soar due to the conflict in Ukraine.
The country was on its knees in the first quarter due to excessive loadshedding which spanned as long as 19 hours a day, and had to import to cover the gap. In the period under review Zimbabwe imported US$103,9 million worth of electricity which was US$47,25 million more than in the same period last year.
Analysts interviewed by Business Weekly agreed that the country is likely to see a widening of the trade deficit at the close of the year due to lower commodity prices and increased imports due to various laws introduced to ease access to basic needs.
-ebusinessweekly
