Trade deficit, which measures the difference between exports and imports per given period, widened by 20% in the month of June coming in at $291 million compared to an outturn of $243 million in May. The wider gap was as a result of the growing variance between exports and imports which moved inversely in June. Exports came off by 9% while imports went up by 6% culminating in a widening of the trade gap from 10% in May to 20% in June.

June total exports came in at $204 million while imports stood at $495.2 million. Cumulative exports to June stood at $1.33 million while cumulative imports stood at $2.64 million to give a cumulative trade deficit of -$1.3 billion. The year to date exports value however compared more favourably to the prior comparable period’s outturn of $1.1 billion.

In the 12 months period to December 2016 Zimbabwe’s trade deficit cumulatively came in at -$2.4 billion. It is worth noting that Zimbabwe has recorded a trade deficit each year since dollarisation in 2009.

A widening gap is interpreted to mean a loss in forex earned as the country pays more for imports than it is paid for exports. The aggregate is closely watched in Zimbabwe because the country uses a multi tier currency system anchored on the US dollar hence requiring more of the scarce currency to fund local and international transactions.

Exports performance in the 6 months period was largely negative with only the month of May recording a positive growth. On average exports have eased by 5% month on month since January, a reflection of weak competitiveness, low production and a weakening macro-economic environment.

While exports have been bearish over the 6 months period, imports were largely mixed and exhibited tendency towards the upside. Between May and June imports tended to rise giving allowance for a wider trade gap.

Gold remained the top exports driver accounting for 36% of the total exports for the month. Despite the top performance gold exports declined by 5% month on month to $73 million. Gold has seen a uptick since the beginning of the second quarter of the year as rains subsided giving rise by both small scale mining and major gold producers. Despite the uptick, gold exports are yet to reach a July-16 high of $88.3 million. Government expects gold production to surpass the prior year by at least 4 tonnes to 28 tonnes. Given the current output performance the target is now likely to be missed. Nickel remained the second top export mineral but also recorded a month on month decline from $32 million to $28 million. Producers of nickel have been largely been less aggressive given the prevailing lower commodity prices and issues surrounding BNC, the country’s sole nickel producer. Tobacco exports came in at $22 million which was an improvement on the previous month. Despite the month on month exports growth which is however uncorrelated to tobacco auction sales, tobacco production is likely to come short of Government target. We project circa 200 million kgs of tobacco against government’s projection of 215 million. The underperformance is driven by low quality crop and increased rejects given earlier heavy rains. Other notable top performers included Sugar, ferrochrome and Diamonds.

The composition of imports top contributors largely remained unchanged. Energy tops the list with Diesel and petrol coming in at 1^st and 2^nd position respectively. The top 4 imports are energy related products and a new entrant Aviation Spirit entered the fray. This largely reflect the growing aviation industry with increased local airlines coming on board. Both diesel and petrol saw their values increase month on month, the same as electricity. Maize imports saw a huge tapering as the harvest season begins. Wheat which has been earmarked for command agriculture in the next season, saw a stable performance month on month. Given the weak macro-economic environment Zimbabwe will likely remain import reliant as a response  to the supply gap. Efforts to improve competitiveness should likewise be addressed although exogenous factors such a stronger USD will continue to weigh on manufacturing rebound compounded by the cash shortages.