Top rough diamonds exporter Botswana continues to record high monthly trade deficits, extending a rout that began more than a year ago when the main commodity came under pressure and as far as the data goes, the country might end the year with the worst trade balance since 2012.
According to Statistics Botswana’s latest trade data for July, the country exported goods and services worth P2.1 billion, almost double the figure from June. Diamonds have regained their top spot as the main export, accounting for 79.1 percent of total exports. The shiny stones are staging a come back following disruptions to the supply chain, affected by the Covid-19 containment measures.
At one point, the country exported no diamonds as main rough stones buyers were locked outside the country, and diamond mining behemoth De Beers had to postpone sights usually held in Gaborone and temporarily relocated them to main diamond centres like Belgium.
Imports for July fell by 18.8 percent to P5.9 billion despite surge in fuel imports, which accounted for 29 percent of total imports. Diamonds imports declined by 72.5 percent, explaining the overall decline in imports . The reason why the diamond rich country imports diamonds is down to its relationship with De Beers, in which the miner has to aggregate all its diamonds and sell them in Botswana, with some of the diamonds coming from other De Beers mines in Canada, Namibia and South Africa.
Though export receipts increased significantly against a slight decline in imports, the country began the third quarter with a trade deficit of P3.7 billion, the second highest monthly trade shortfall of the year. The skewed trade data follows a similar patter of widening deficits; with P4.2 billion in the first quarter before ballooning to P9.3 billion in the second quarter, setting a new record for the biggest quarterly shortfall in over two decades.
Botswana’s trade position has been worsening, with the last five years revealing a troubling pattern where imports rose faster than exports, a sign that the country is losing money that could be circulating in the domestic economy that has been sluggish. Botswana ended 2019 with a cumulative trade balance deficit of P14.2 billion, the highest since 2012’s trade shortfall of P16.3 billion. The country’s continued growing deficits are reversals of gains made in the five-year period of consecutive trade balance surpluses that started in 2014, though the surpluses were growing smaller in size.