- Exports decreased by 5.96%
- Imports increased by 7.62%
- Trade deficit widened by 109%
Harare- Zimbabwe's trade deficit expanded to a three-digit figure in July 2023, marking a significant increase compared to the two-digit deficit recorded in June 2023. The total value of exports in July 2023 was US$603.2 million, representing a 5.96% decrease from the reported value of US$641.5 million in June 2023.
On the other hand, total imports for July 2023 amounted to US$782.9 million, indicating a 7.62% increase from the reported value of $727.4 million in June 2023.
Consequently, the trade deficit for July 2023 stood at US$179.6 million, reflecting a substantial 109% increase from the deficit of US$85.9 million recorded in July 2023.
The trade deficit in the specified period expanded as a result of a decline in exports coupled with an increase in imports. Export figures decreased by 5.96%, while imports surged by 7.62%.
The decrease in gold exports and nickel mattes played a significant role in the widening trade deficit. Gold exports experienced a decline from 30.2% in June to 26.7% during the period under consideration. This decrease of 3.5 percentage points indicates a reduction in the volume or value of gold exported. The decline in gold exports contributed to the overall decrease in export figures and had a negative impact on the trade balance.
Similarly, nickel mattes witnessed a sharp decrease from 17.1% to 11.1%. This significant decline of 6 percentage points suggests a substantial drop in the export of nickel mattes. The decrease in nickel matte exports further contributed to the contraction of export figures and added to the trade deficit.
In addition to gold and nickel mattes, other minerals also experienced a marginal drop in export figures. The percentage of exports attributed to other minerals decreased from 12.6% to 11.3%, indicating a slight reduction in the export volume or value of these minerals. Although the decrease was relatively modest, it still contributed to the overall decline in exports.
On a positive note, the export of tobacco witnessed a marginal increase from 8% to 8.9%. This indicates a slight growth in the export volume or value of tobacco products. However, the magnitude of this increase was not sufficient to offset the decline in other export sectors, and thus, the trade deficit continued to widen.
Despite the power supply situation showing some improvement with the increase in water levels at Kariba and the commissioning of Hwange Unit 7, the power generation capacity remains insufficient to meet the demands of mining companies, particularly impacting gold, PGMs and nickel production. Zimplats, the largest platinum group metals (PGMs) company in Zimbabwe, continues to face challenges as it imports 50% of its power requirements, which significantly increases its operational costs and affect PGMs production.
The mining industry has been further burdened by the government's policy of withholding 25% of export surrender portions. The withheld export proceeds are essential for financing mining operations. The combination of inadequate power supply and the withholding of export surrender portions has created a challenging environment for mining companies, affecting the exports efficacy.
Gold exports also suffered from the halt of Bilboes operations by Caledonia, one of the leading gold producers. This suspension, which took place in July, had a direct effect on gold production in Zimbabwe and subsequently led to a decrease in gold exports.
The production of nickel ore, and concentrates has been significantly affected by the decline of output at Bindura Nickel Corporation, one of the largest nickel producers in the region. The company has been grappling with breakdowns at its Concentrator Plant, as well as the malfunctioning of the Sub Vertical Rock Winder. The breakdowns at the Concentrator Plant have had a direct impact on the processing and production of nickel mattes, ore, and concentrates.
Similarly, the breakdown of the Sub Vertical Rock Winder further compounds the production challenges faced by Bindura Nickel Corporation. The Rock Winder plays a crucial role in transporting materials and facilitating mining operations. The combined effect of breakdowns at the Concentrator Plant and the Sub Vertical Rock Winder has had a significant impact on nickel production, subsequently causing a slump in nickel exports
Zimbabwe's ongoing practice of exporting raw minerals without adding value has had a negative impact on the country's trade balance. This trend has resulted in a widening trade deficit, as the revenue generated from these exports falls below the potential average.
The export profile of Zimbabwe remains heavily reliant on raw minerals, with limited value addition. The lack of value addition in the export of raw minerals means that Zimbabwe misses out on the potential economic benefits that come with processing and refining these resources domestically.
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