Harare – Zimbabwe’s April trade balance plunged to a deficit of $140 million after it had narrowed down in the first quarter of the year, but compares better year on year basis, latest figures from Zimbabwe National Statistical Agency (ZIMSTAT) shows.
Trade deficit, which measures the difference between exports and imports per given period was $30 million in March 2019 and was $305 million in April 2018, which represents a difference of 70 percent year to date.
According to Equity Axis analysts, “It is however interesting to note that this improved external trade performance arose as a result of a weak macroeconomic environment characterised with weakening aggregate demand as a result of austerity measures currently being undertaken.”
“Other factors include the shortage of hard currency which has dragged production across the economy and consequently these negative payoffs have a potential economic growth weighing implication.”
Exports dropped 6.4 percent month on month to $276.97 million while cumulative exports for the 4 months period to April came in at $1.2 billion which is almost stable on the prior year.
Gold exports declined significantly to $81 million in April compared to a year earlier recorded at $126 million and also coming short of $84 million recorded in the previous month.
Cumulative gold deliveries for the first 4 months of 2019 were at 8.6 tonnes which compares less favourably to 11.2 tonnes achieved in the prior year, a 23 percent decline, while tobacco sales since the opening of the selling season now at 111.7 million kgs is 19.5 percent below the same period last year.
Imports in April decreased by 27 percent month on month to $416.6 million while on a cumulative 4 months, the total imports were however 33 percent more improved against the same period in 2018.
Equity Axis analysts noted that the record slowdown in imports is a consequence of government’s cutback in importation of key factor of production imports such as Diesel which is the highest imported product by value, wheat which is used in the production of bread and soya bean oil which is used in the processing of cooking oil.
Notably, leading the value in exports are minerals led by gold and nickel while tobacco which came off at number 4 is the only product in the top ten outside minerals bracket.
“The bias towards minerals exports is likely to prevail at least in the foreseeable future due to Zimbabwe’s economic structure and lack of diverse productive and competitive base,” Equity Axis analysts have said.
“Undiversified economic structures significantly biased towards commodities are more vulnerable to cyclical vagaries and risks such as commodity circles which may cause severe recessions.”
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Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment.