Trade deficit eases but worries persist
Mbongeni Mguni | Thursday November 5, 2020 11:20
Merchandise trade refers to the import and export of goods into and out of Botswana. A trade deficit means the country is importing more goods than it is exporting, a situation that, when it persists, generally weakens foreign reserves and the local currency.
Exports in August amounted to P2.7 billion compared to imports of P5.7 billion. The August trade shortfall, however, continues a string of deficits seen since February when global borders and demand dropped due to the onset of Covid-19.
The pandemic affected the country’s key merchandise exports which include diamonds, other minerals as well as machinery and electrical equipment. August’s trade deficit is the third worst for the year after the P6.3 billion recorded in June and the P3.5 billion in July.
The cumulative trade balance for the year to August indicates a deficit of P20 billion, which compares negatively with the full year trade shortfall of P14.3 billion for 2019. On Monday, analysts at Kgori Capital said they had noted a decline in the rolling 12 month trade balance in August, owing to “continued moderation in diamond trade”.
Bank of Botswana officials however, have warned that the continued deficits are placing the country’s foreign reserves at risk, particularly as key receipts from tourism and the regional customs union underperform due to Covid-19.