adminThe country’s trade deficit narrowed 23,6 percent to $2,87 billion in the 10 months to October from $3,76 billion in the year ago period as operational fundamentals of the economy continue to weaken. Latest data from ZimStats shows imports in the period amounted to $5,29 billion from $6,55 billion a year ago while exports were $2,4 billion against $2,78 billion last year pointing to a decline to lower demand for final goods import in the country.
While business failures has mostly led to the drop in demand for imported capital goods, analysts also say the continued drop in imports is also due to trade restrictions that Government has placed on certain products. The country’s import cover is between three and four days against a SADC requirement of at least three months cover.
The country’s top imports include fuel, chemicals, machinery and equipment, iron and steel, foodstuffs and vegetables. In the period cooking oil (soyabean oil) imports amounted to $11,98 million, sunflower seed cooking oil at $18,61 million.
Sweet biscuits worth $9,49 million were also brought in and $18,54 million of water including flavoured and sweetened. $3,97 million worth of exercise books were imported.
Unleaded petrol amounting to $349,35 million was imported and $768,86 million diesel which has a lot of industrial uses. $44,88 million of electrical energy was also brought in. Ammonium nitrate worth $113,6 million was imported as Sable Chemicals continues to suffer from antiquated manufacturing processes and the high cost of electricity.
$24 million worth of galvanised zinc coated steel coils was imported as industry awaits the revival of Ziscosteel. $63,5 million nickel matte was brought mostly destined for RioZim’s ENR which has got contracts from the region.
And in the presence of manufacturers such as Zimplow, $490 599 worth of ploughs were imported. Machinery for sugar manufacture for starafrica worth $2,92 million was brought in.
$46,99 million worth of cellphone handsets were brought in. This is what prompted the Finance Ministry to impose a duty on cellphones. Road tractors for semi-trailers (magonyeti) worth $24,86 million were bought, $16,6 million worth of tractors and $34 million worth of 26-seater buses. Other cars worth $210 million were imported during the period.
But the export problem stretches back considerably further. Volumes have essentially declined or stagnated since the mid-2000s.
Economists say weak exports are symptomatic of much more serious competitive problems for the country. Productivity in the country has declined condemning the industries to weak income growth in the manufacturing sector.
ZCTU secretary-general Japheth Moyo on Tuesday told a ZEPARU/labour conference that at least 10 companies have been closing shop since January.
The absence of cheap funding seems to be the major contributor as financial institutions are key suppliers of services such as the evaluation of counter-party default risk and guarantees to exporters.
Though no survey or study has been done, economists estimate that a lack of financing accounts for nearly two thirds of the decline in exports. Tighter credit availability leads to fewer exports.
The country exported $11,83 million of freshwater fish, $2,5 million of fresh cut flowers, $4,58 million of macadamias and $15,89 million black tea.
Cane sugar worth $121,9 million was exported and $483 million flue cured tobacco. On minerals, $19 million granite, $300,6 million nickel ore and concentrates, $189,1 million unsorted diamonds, $449,9 million in gold, $115,77 million platinum unwrought.
However, generally in an illiquid economy; consumers and firms demand fewer goods although the decline in demand is less than equal across all industry because some sectors are more impacted than others.
When consumers and companies adjust their spending downwards, demand for both domestic and imported goods falls.
South Africa remains the country’s largest trading partner with imports of $2,26 billion and exports of $1,58 billion. – Wires.
Online Reporter