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OpenZimbabwe's Trade Deficit Widens, Reaching US$2.1 Billion In 2024
Zimbabwe’s trade deficit increased by 6% to US$2.1 billion in 2024, mainly due to a rise in grain and fuel imports.
According to the latest trade data from the Zimbabwe National Statistics Agency (ZimStat), imports grew by 4% to US$9.5 billion, while exports reached US$7.4 billion, up 3% from 2023.
A trade deficit happens when a country imports more goods and services than it exports, meaning it buys more from other countries than it sells abroad.
Economic experts who spoke to the Independent warned that the growing trade deficit could pressure the local currency and worsen inflation, which spiked sharply in January, both in U.S. dollars and local currency. Economist Stevenson Dhlamini said:
The increase in imports may be due to the grain imports to complement the food security efforts caused by the drought.
The increase in exports may (also) be due to the recovery of the prices of commodities and the improving global economy.
Economist Prosper Chitambara attributed the widening trade deficit to drought conditions during the 2023/24 summer cropping season, which caused a substantial decline in agricultural production. Said Chitambara:
So, it meant that our agricultural exports were affected. But it also meant we had to import more agricultural commodities into the country.
It also meant that our import bill obviously increased. But the slowdown in commodity prices in general also adversely affected our export earnings.
I think those two factors, and of course, the fact that our economy last year declined, also meant that production declined, exports therefore declined, and that affected our trade position negatively.
Persistence Gwanyanya, a member of the Reserve Bank of Zimbabwe’s (RBZ) Monetary Policy Committee, said that despite the widening trade deficit, Zimbabwe is seeing growth in external trade, which could indicate a recovery in economic activity. Said Gwanyanya:
While the trade deficit has been widening, our current account has been improving over the years, which reflects increased inflows from other BOP (balance of payment) items, mainly diaspora remittances.
This only demonstrates the need to harness foreign currency generated from a favourable BOP position into the formal sector.
Importantly, this demonstrates the urgency to deal with the informal sectors where a significant amount of money from favourable BOP is sloshing.
Zimbabwe imports a diverse array of products, including machinery, mechanical appliances, raw materials, food, fuels, minerals, textiles, clothing, footwear, electricity, chemicals, metals, and intermediate goods. In contrast, exports are primarily composed of raw materials.
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