Zim’s trade deficit continues to widen

against exports of about US$1,6 billion.
The figures reflect a trade deficit of US$1,2 billion, up from a deficit of US$557,6 million recorded for the first three months of the year, when the country registered imports worth around US$1,5 billion and exports at US$1 billion.
According to the Government’s economic update for January to May, the country’s imports stood at US$2,8 billion up from around US$2,6 billion during the prior period whilst exports have reached US$1,6 billion compared to US$1,1 billion recorded last year.
The update indicated strong performance in the agriculture and mining sectors.
These sectors have contributed to the increase of exports due, particularly the mining sector, which has seen increased production at the country’s mines, buoyed by strong global demand.
Economists contend that low industrial capacity is responsible for the wide trade deficit and it calls for supportive policies for the export sector and more production in order to ease import pressure that can significantly erode liquidity on the local market.
The trade deficit growth is also attributable to increased fuel import costs, coupled with higher costs on imports of raw materials and intermediate goods for industry.
Meanwhile, the Medium Term Plan projects import growth to rise in tandem with nominal Gross Domestic Product growth in the long run.
“Exports are forecast to increase at a faster rate than growth in the rest of the economy reflecting the dominance of the mining sector. Over 95 percent of mining sector output is exported,” reads part of the MTP.