Zambia has recorded the third trade deficit of the year at K1.6 billion, according to Central Statistical Office data.
According to provisional CSO data, Zambia has sustained a massive trade deficit in June this year, reversing gains having posted a trade surplus of K245.4 million recorded in May.
This follows a turnaround from having recorded two successive trade surpluses in both February and March of K613.1 million and K639 million respectively.
June’s trade deficit of K1.6 billion also represents the highest on record since April’s deficit where the country’s deficit peaked to K1.8 billion, the highest recorded so far this year, leaving the K746.3 million posted in January as the third highest deficit.
A trade deficit represents an outflow of domestic currency to foreign markets, and is an economic measure of a negative balance of trade in which a country’s imports exceeds its exports.
Market analysts have noted that high trade deficits could have a bearing on the country’s economic recovery prospects, and particularly the local currency.
“Zambia records a trade deficit of K1,612.8 million in June, 2018, from a trade surplus of K245.4 million recorded in May, 2018. This means that the country imported more in June, 2018, than it exported in nominal terms,” CSO stated in July’s monthly bulletin, which also showed the annual rate of inflation peaking to 7.8 per cent this month.
“Imports increased by 13 per cent from K9,020.6 million in May 2018 to K10, 191.2 million in June 2018. This increase is mainly attributed to the increase in the imports of capital goods by 24.6 per cent from K2,685.6 million in May, 2018, to K3,345.7 million in June, 2018.”
Data shows that Zambia’s exports declined in June, mainly on account of a decrease in traditional exports between May and June, whilst Non-Traditional Exports (NTEs) also equally fell.
“Exports decreased by 7.4 per cent from K9,266.0 million in May, 2018 to K8,578.4 million in June, 2018. The decrease in the value of exports is mainly attributed to the reduction in the traditional exports by 9.2 per cent from K7,314.3 million in May, 2018, to K6,641.2 million in June, 2018,” stated CSO.
“NTEs decreased by 0.7 per cent from K1,951.7 million in May, 2018 to K1,937.3 million in June, 2018. The share of NTEs recorded an average of 21.8 percent in revenue earnings between June, 2018, and May, 2018.”