Zim records $1,2bn deficit

Source: Zim records $1,2bn deficit – DailyNews Live

BUSINESS WRITER  29 August 2017

HARARE – Zimbabwe recorded a trade deficit of $1,248 billion for the seven
months to July 2017, as imports made up mainly of consumption goods,
continued to outstrip exports.

According to the Zimbabwe National Statistics Agency, the country imported
goods worth $3,118 billion for the period under review, against exports of
$1,870 billion.

The trade deficit was, however, 6,5 percent lower than the $1,336 billion
recorded in the same period last year.

Top imports for the period were petrol, food and beverages, oil cake,
electrical energy and medicines.

Economic analysts said the drop in imports was due to shrinking aggregate
demand and recent restrictions on imports.

A strong dollar relative to trading partner currencies also lowered the
greenback import cost on a constant quantity basis.

The persisting, though narrowing, trade deficit also presents continued
pressure on market liquidity.

According to the figures, South Africa remained the country’s top trading
partner in the period under review.

The neighbouring country accounted for $954 million of Zimbabwe’s exports
in the eight-month period under review.

Zimbabwe imported goods worth $1,204 billion from South Africa during the
period, leaving a trade imbalance of $320 million.

Economists say the country’s trade deficit may continue in the absence of
quick mechanisms to stimulate industrial activity and enhance production.

Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said the imports ban
by government last year resulted in the revival of around 350 firms in the
manufacturing sector.

“Some firms in the food processing and packaging sub-sectors are now
operating at above 70 percent of capacity. Prioritisation of foreign
exchange allocations by the bank to these firms continues to greatly
assist the localisation process and enhancing local production and
exports,” he said in the mid-term monetary policy statement.

The central bank chief noted that it was against this backdrop that the
RBZ’s supply-side funding initiatives to enhance production, productivity
and exports were put in place at the beginning of the year.

The funding initiatives include the export finance facility, business
linkages fund, tourism support facility, cross-border facility, gold
support facility, women empowerment fund, youth empowerment fund, fund for
people with disabilities and the horticulture support facility.

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