‘We’re running a bubble economy’— Biti

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Finance minister yesterday described Zimbabwe as a “bubble economy”, as the country expects imports to grow to more than half of the country’s nominal gross domestic product (GDP). Imports may hit $3,6 billion by year-end, about double last year’s level of $1,9 billion as GDP slows to just under $5,5 million.
This has forced it to revise upwards the ratio of imports to GDP to 37,5% from 36,3% for the remainder of the year. Last year the ratio was 30,4%.
Imports are projected to hit $3,6 billion, widening the trade deficit to $1,3 billion from $1,9 million last year. In the first half of the year the deficit was estimated at $675 million.
“We’re running a bubble economy. We’re eating what we’re not producing,” Biti said, adding that local banks funded the bulk of the imports.
In the first four months of the year, the country recorded a trade deficit of $675 million after imports surged to $1,5 billion against exports of $870 million.
Food – both grains and processed – accounted for the bulk of the imports.
The International Monetary Fund (IMF) estimates that food imports are estimated to have grown 118% last year.
The cargo included imports of processed fast-moving consumer goods by retail chains and grains by the government.
In the first six months of the year, the country spend $13,2 million on food imports. Part of this financed imports of maize and of wheat.
The Commercial Farmers’ Union, which issued a production warning for maize and wheat last week, predicts the country could import around 390 000 to 400 000 tonnes of wheat and nearly a million tonnes of maize next year.
Wheat is seen touching a record low in the next agricultural season, falling steeply by 37,4% to 11 300 tonnes from
18 050 tonnes last year against the country’s annual demand of about 250 000 tonnes.
The country last produced at this level in 2000.
Although maize may rise to 819 250 tonnes from 718 250 tonnes last year – just marginally above the staple grain’s all-time low of 580 000 tonnes in 2007/2008 – this will not be enough to avert imports as demand currently runs at about 1,8 million tonnes.