Zimbabwe narrowed its trade deficit for the first five months of 2019, albeit still in the negative -thanks to a combination of improved export earnings and a decline in imports as compared to same period last year, 263Chat Business can report.
The country’s trade deficit closed in the gap to record -US$ 399 million as compared to -US$ 1.263 billion of last year.
This was on account of a 5.1 percent increase in export earnings of US$ 1.558 billion from US$ 1.482 billion realized last year during the period and a 28 percent decline in imports from US$ 2.747 billion last year to US$ 1.957 billion as at 31 May 2019.
Imports have been mainly stifled by foreign currency shortages in the country.
“Merchandise imports have been declining due to foreign exchange shortages and the effects of the austerity measures being implemented by the government. This has resulted in the narrowing of the trade deficit since September 2018,” the Reserve Bank of Zimbabwe (RBZ) said in a statement.
The bulk of imports came from South Africa which remains the country’s biggest trading partners while Singapore has a substantial share for its fuel supplies into the country.
“Imports for the period January to May 2019 were mainly composed of diesel (18.8%), petrol (9.3%), medicines (2%) and crude soya bean oil (1.4%),” added the Central Bank statement.
On the export front, Zimbabwe sold merchandise mainly in form of platinum group of metals (PGMs), gold and nickel among others and tobacco mainly to South African, Asian and European markets. South Africa absorbed 46% total exports.
Zimbabwe however, remains a net exporter of raw commodities due to its failure to industrialize and value-add its mineral resources.
Experts however, point to a much difficult second half of the year characterized by worsening power cuts and grain shortages that have prompted authorities to intensify importation.
Starting last month, Zimbabwe has been importing electricity from the Southern African Power Pool in a bid to mitigate power challenges.
The country is grappling with foreign reserves shortages to meet external payments for essentials such as electricity and fuel.
Matters are compounded by low productivity levels in productive sectors of agriculture and manufacturing weighing in heavily on poor export receipts.