Tuesday, January 19, 2021

Trade deficit widens by nearly 50 percent in October

The latest figures released by the Central Statistics Office show that the month of October registered the highest trade deficit (P1 469.6 million) during the first 10 months of 2008.

Diamond trade, which is the mainstay of Botswana’s economy, was badly affected.
During September 2008, the export value of non-industrial diamonds (not worked or simply sawn, cleaved or bruted) was P2.16 billion but the figure dropped to P580 million the following month.

October was the first month to register a trade deficit ÔÇô having more imports than exports ÔÇô in excess of P1 billion with imports value of over P3 billion while exports were valued below P2 billion. It was the fourth month during 2008 to register a deficit after April (P129.4 million), May (P905.2 million) and July with P393 million.
The CSO report says that during September 2008, both imports and exports decreased but imports managed to increase in October while exports declined further.

The trade balance trend started going down steadily from March 2007 and reached its lowest in October last year. Total imports for October were valued at P3 246 million, representing an increase of 17.7 percent from the September value of P2 756.8 million. Total exports were valued at P1 776.4 million during October, which represented a decline of 47.8 percent (P1 625 million) from the P3 401.4 million recorded in September.
Total exports declined by 34.1 percent (P921.1 million) as compared to the value of P2 697.5 recorded during October 2007.

Of the total imports value of P3 246 million recorded during October 2008, machinery and electrical equipment contributed 18 percent (P585.7 million) followed by fuel with 14.7 percent (P478.7 million). As regards total exports, 46.2 percent (P821.5 million) was attributable to diamond exports while copper/nickel contributed 31.6 percent ÔÇô P561.6 million.

Textile contributed 10.7 percent (P190.2 million) while machinery and electrical equipment and meat and meat products were 2.6 percent (P45.6 million) and 2.4 percent (P42.7 million) respectively. Exports of machinery and electrical equipment consists of re-exports ÔÇô goods that were initially imported for local consumption but later exported permanently out of the country ÔÇô mainly as Botswana does not manufacture most of the commodities in that group.

During the month under review, South Africa provided 77.5 percent of total imports; the European Union supplied imports valued at P406.9 million (12.5 percent of total imports) with the United Kingdom alone providing 9.3 percent ÔÇô P303.4 million; Asia supplied 7 percent (P228 million) of total imports with 2.8 percent (P90.4 million) and 1.3 percent (P43.5 million) coming from China and Israel respectively. Imports from the United States represented 1.1 percent (P34.4 million) of total imports.

Of total exports, the Southern African Customs Union (SACU) received 28.6 percent (P507.5 million) with South Africa alone receiving 28.1 percent (P498.4 million).

Despite its political and economic woes, Zimbabwe continues to be an important trading partner. Exports to that country during October last year were valued at P118.1 million, representing 6.6 percent of total exports. What that means is that in terms of exports, Botswana did more trade with Zimbabwe than it did with China (P85.4 million) and the United States (30.4 million) combined. Exports to Zimbabwe mainly comprise salt and soda ash, copper/nickel ores and concentrates, bituminous coal, recovered paper and paperboard as well as copper/nickel mattes.

Figures provided by the CSO will not match with those from the Bank of Botswana (BoB). The reason for that is that CSO compiles external trade using the United Nations Statistics Division Guidelines through which foreign trade is recorded as at the time the consignment crosses the border. BoB compiles Balance of Payments from actual receipts in respect of sales made on exported commodities.

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