Zimbabwe’s net external trading position remained negative both month on month in July and cumulatively year on year for the first 7 months of the year. The trade deficit which is perennial, was however narrower in July and cumulatively year on year for the first 7 months. The trade gap for the month of July stood at $218 million down from $230 million in June a 5.3% improvement.
Comparing the first 7 months of the year to the same period year, the trade gap has narrowed by $334 million which is largely attributable to a quicker growth in exports which countered imports growth. A dissection of the trade data shows that imports have maintained a rising tally but exports have been rising faster after institution of various export promotion measures.
Total exports for the month of July stood at $264.1 million which is 0.3% below the prior month’s outturn and the least performance in 3 months as well as a below average outturn on a year to date scale. On average the country has exported goods worth $267 million a month between January and July. In the same period last year average monthly exports were significantly lower at $187 million which shows a strong growth in that respective aggregate.
Total imports came in at $482.1 million in July which is a 2.7% decline compared to June’s outturn. Between January and July imports have realized a decline in 3 of the 7 months while an average of $445 million worth of goods were imported within the period per month. Compared to the first 7 months of the prior year, total cumulative imports have grown by 7%.
The growing disparity shows that the country is chasing yet another moving target as imports keep rising despite the growth in exports. if remittances do not grow at a faster pace, it therefore implies that the deficit will be with us for much longer. Growth in remittances is discouraged by the currency disparity which promotes unregulated channels while it is a given that exports growth will largely be cyclical subjective and limited to the mining sector given exports skew towards that sector.
Exports composition remained unchanged showing a great bias towards minerals and commodities in general. This bias subjects the economy to cycles in the commodities markets and given the lack of diversity, the economy is not insulated to cyclical downturns such as the one experienced in oil producing countries which are less diversified such as Nigeria and Angola. Global commodities in general are even trading at sub optimal levels and this contributed to the recent economic growth decline for most of Sub Saharan African countries such Zambia, SA and DRC including Zimbabwe to name but a few. Outside of this risk, Zimbabwe has not been able to effectively value add the resources which is a form of diversification through industrial processing, a part of manufacturing. Gold, Nickel and Tobacco were the respective top exported products in the month of July.
Driving imports in the month of July was energy demand which likewise is a common trait for the country. Diesel, Petrol, Electricity and Aviation Spirit were the most sought after imports in the month. The country has been undertaking initiatives to increase own production of energy especially electrical through alternatives such as hydro, solar and expansions of existing power stations. Aviation spirit demand has been slowly rising given the recent surge in local aviation players. Maize imports are gradually coming off as the local harvest picks pace. These developments are likely to impact positively on the import bill in the short term.
