HARARE – Zimbabwe's current account deficit ballooned by half a billion dollars in the 10 months to October 2013 as the country remains a net importer.
Figures released by the Zimbabwe Statistical Agency indicate that the southern African country ? whose industry is depressed, operating at way below 50 percent capacity ? imported goods worth $6,55 billion against exports of $2,78 billion in the period under review.
This resulted in the trade deficit for the period widening to $3,76 billion from $3,02 billion in August and $2,37 billion at half year.
The deficit has already surpassed the $3 billion mark forecast by economists at the beginning of the year, in a trend that is continuing to hold back gross domestic product growth.
Zimbabwe has in the past three years experienced an increase in imports due to limited production, lack of long-term credit lines to boost the local manufacturing sector and the absence of a workable value addition policy.
Market watchers say there is urgent need for the country to adopt sound industrialisation strategies as well as the diversification of the export base in order to reduce the trade gap.
“It is a major cause for concern that we continue to witness the increase in the trade gap.
“Imports have continued to outpace the exports and there is urgent need for reviving the export sector,” said an economist with a local bank.
In the 10 month period, South Africa remained Zimbabwe’s largest trading partner accounting for $3,17 billion of the imports and $2,04 billion of exports mainly driven by the country’s mineral outputs.
About 60 percent of the goods in Zimbabwean shops now are imported from South Africa, China and Nigeria.
However, Finance minister Patrick Chinamasa said the government will soon come up with measures to address the flooding of cheap imports after expressing concern that Zimbabwe had become a warehouse for goods produced in other economies.
“We are now a warehouse for everything that is being produced abroad ? from sweet potatoes, tomatoes to okra,” he said recently.
The next few months, he said, should see a marked reversal of the trend while urging industry to come up with re-tooling proposals.
Chinamasa could use that to raise duty on products which are also produced in Zimbabwe, particularly agricultural produce.
This comes after the African Development Bank (AfDB) recently recommended Zimbabwe to limit imports as the year progresses to reduce the current high trade deficit.
The bank noted that the reduction would result in more foreign currency retention and provide local industry with an opportunity to recuperate.
“Given that total imports already constitute about 52 percent of their projected value in 2013, there is need to contain them as the year progresses to ensure that the targeted value is achieved,” the bank said in a monthly economic review.