23 December 2012

Zimbabwe: Trade Deficit Tops U.S $3,8 Billion

ZIMBABWE registered a US$3,8 billion budget deficit in the period January to November 2012, as the volume of imports continued to gallop ahead of exports.

According to latest statistics from the Ministry of Finance, imports in the period to November 15 totalled US$7 billion.

Presenting the State of the Economy address, Finance Minister Tendai Biti last week said imports had increased by US$2,5 billion over last year's comparative period.

"Cumulative imports to November 15, 2012, amounted US$7 billion compared to US$5,5 billion recorded in the corresponding period in 2011," he said.

Total foreign payments breached the US$700 million threshold three times since January in March, July and October, while exceeding US$600 million mark in January, April, May, June, August and September.

In what is fast becoming an ominous reality, imports are this year expected to exceed US$8 billion.

The disparity between imports and exports means the country is losing more than it is earning in terms of foreign currency inflows.

As such, growing current account deficit drains most of the liquidity critically required to fund industry.

Imports were in sharp contrast to the US$3,42 billion worth of exports from Zimbabwe over the same period.

The country's trade deficit remains unsustainable despite the fact that exports rose by 9,6 percent since January.

Minerals dominated exports, accounting for 61 percent of the export inflows, followed by tobacco at 21,8 percent, agriculture 9,2 percent, manufacturing 6,7 percent, horticulture 0,3 percent and hunting 0,2 percent.

Mining exports totalled US$2,1 billion, tobacco US$747,2 million, agriculture US$313,4 million, manufacturing US$228,4 million, horticulture US$10 million, while hunting contributed US$7,7 million.

"Cumulatively, total exports to 15 November stood at US$3,42 billion compared with US$3,12 billion realised during the corresponding period in 2011," he said.

Zimbabwean industries have generally had difficulties in competing on the global market due to old equipment, the high cost of funding and utilities, critical shortage of power and high wage demands, among others.

The multiplicity of factors that continue to dog industry has seen industrial capacity, which rose from about 20 percent in 2008 to 57 percent last year, but falling again this year to an average of 44,5 percent.

The Ministry of Industry and Commerce estimates that local industry needs about US$2,5 billion to re- build its industrial base after a decade of economic instability.

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