Zim trade deficit falls 34,3pc in October

ZIMBABWE’S trade deficit decreased by 34,3 percent to US$137,7 million in October this year, on the back of improved export performance of gold and tobacco sub-sectors, official statistics show.

A trade deficit reflects the difference between the value of a country’s exports and imports. A fall in the deficit be a positive development, as it means a country can conserve precious foreign currency for key certain obligations.

However, economists disagree on the simple question of whether sustained trade deficits are good, bad, or don’t matter much for a country and its economy.

That’s because there are so many variables and so many ways to generate a trade deficit and so many ways it might help or hurt an economy, or reflect good or bad aspects of that economy.

A trade deficit may be due to expenditure in procurement of machinery and equipment or technologies that may significantly benefit the country in the future.

According to the Zimbabwe National Statistics Agency (Zimstat), “Zimbabwe’s goods trade deficit for October 2024 was US$137,7 million, a 34,3 percent decrease from September 2024 deficit of US$209,5 million.

“October 2024 exports amounted to US$698,1 million, an increase of 21,4 percent (US$123,1 million) from the September 2024 value of US$575 million.”

Among the top 10 products exported in October 2024 were semi-manufactured gold, tobacco, partly or wholly stemmed/stripped, and nickel mattes, accounting for 42,4 percent, 17,5 percent, and 12,2 percent of the total value of US$698,1 million, respectively.

Ferro-chromium accounted for 4,8 percent of total exports, nickel ores and concentrates 3,5 percent,coke and semi-coke of coal 2,2 percent, other mineral substances 1,9 percent, chromium ores and concentrates 1,8 percent, other ores and concentrates 1,4 percent, industrial diamonds unworked 1,4 percent,and other exports 10,8 percent.

Economic analyst Ms Wendy Mpofu attributed the decrease in trade deficit during the period under review to improved gold deliveries entailing more exports of the yellow metal.

“Zimbabwe’s trade deficit for October has declined due to a combination of factors that include improved export performance, particularly commodities like gold and tobacco.

“Gold has performed fairly well in the first 10 months of the year, and particularly in October monthly output was the highest at over 4 tonnes. Increased gold deliveries also entail improved export earnings which have a direct positive impact on the trade deficit during the period under review,” she said.

“Moreso, traditionally in October the country experiences improved foreign currency inflows mainly from tobacco, which is exported around the globe.

Increased foreign exchange inflows help in stabilising the exchange rate and reduce the trade deficit.”Gold is the country’s largest single export whose production, according to official figures from Fidelity Gold Refinery (FGR) improved by 23,5 percent to 4,2 tonnes last month from 3,4 tonnes in September 2024.

According to statistics from FGR, Zimbabwe’s exclusive buyer of the yellow metal, in the first 10 months of this year, deliveries of the precious mineral totalled 28,2 tonnes compared to 26,6 tonnes in the same period in 2023. On the other hand, according to the Tobacco Industry and Marketing Board, exports of the golden leaf have continued to increase since the beginning of the year reaching US$1,1 billion as of November 15.

Underpinned by the National Development Strategy 1 (NDS 1), ZimTrade, Zimbabwe’s trade promotion and development body seeks to improve total exports by at least 10 percent annually to US$14 billion by 2030.

Last year, the country’s total value of exported goods grew by nearly 10 percent to US$7,2 billion from US$6,59 billion realised over the same period in 2022.Another economist Ms Mercy Shumba echoed similar sentiments, adding that the Government’s efforts to promote exports and reduce imports.

“The Government is relentlessly pursuing efforts to cut-down on imports while promoting the growth of exports.

“However, the country’s trade deficit remains a cause for concern and Zimbabwe needs to continuously implement policies that foster export growth and import reduction to attain a sustainable trade balance,” she said.

During the month under review, Zimstat indicated that imports totalled US$835,8 million, which was 6,6 percent (US$51,4 million) above the September 2024 imports of US$784,4 million.

The top 10 imported products were mineral fuels, mineral oils and products, machinery and mechanical appliances, cereals, and vehicles.

The above-named products constituted 21 percent, 10,4 percent, 9,7 percent, and 7,2 percent of the total import value of US$865,8 million respectively.

Articles of iron or steel accounted for 6,1 percent, electrical machinery and equipment 6,1 percent, animal or vegetable fats and oils 3,8 percent,fertilisers 3,8 percent, plastics 3,4 percent, miscellaneous chemical products 2,5 percent, and other products 25,9 percent.

Major import source countries during the period under review were South Africa which accounted for 39,6 percent of the total value of imports followed by China (13,8 percent), Bahamas (8,3 percent), and Singapore (5,7 percent).“The four countries accounted for around 68 percent of the total import value of US$835,8 million,” said the agency.-herald