ZIMBABWE’S trade deficit narrowed by 63% to US$644 million between February and August this year compared to the same period last year, due to shortages of foreign currency for imports.
BY MTHANDAZO NYONI
Figures released by the Zimbabwe Statistics Agency (ZimStat) show that between February and August, the country imported goods and services worth US$2,79 billion against exports of US$2,15 billion.
Trade figures for January 2018 are still not available because the Zimbabwe Revenue Authority, which is the source of merchandise trade data, has not produced them, according to ZimStat.
In the same period last year, imports stood at US$4,13 billion and exports at US$2,41 billion, giving a trade deficit of US$1,73 billion.
Exports dropped by 11% on the prior year figures, while imports fell by 32%.
Analysts have attributed the decline in the import bill to foreign currency shortages as well as a drop in the budget deficit.
In the period under review, all import drivers like electricity, fuel and soyabeans recorded a drop.
For instance, the electricity bill dropped by 70% to US$39 million, diesel by 10% to US$556 million, petrol 21% to US$248 million, while soyabeans fell by 46% to US$45 million.
Major foreign currency earners like gold, tobacco, nickel mattes and ferrochromium also dropped. Only nickel ores and diamond recorded an increase.
In his monetary policy statement released last month, central bank governor John Mangudya attributed import compression to expenditure-switching effects of the introduction of the exchange rate.
“In response to the fiscal and monetary reforms, the country witnessed an improvement in the current account balance during the first half of 2019, due to import compression following the expenditure-switching effects of the introduction of the exchange rate, which has seen consumption moving away from imported products to domestically-produced goods,” he said.
Mangudya said the current account deficit narrowed from a peak of US$2,7 billion in 2011 to US$1,4 billion in 2018 and was projected to further contract to US$597,2 million in 2019.
“This development augurs well with easing of pressures on the foreign currency demand and exchange rate stability,” he said.