Trade surplus narrowed in 2018 on higher machinery imports

Mbongeni Mguni | Thursday March 7, 2019 12:00

 

The merchandise trade balance is the difference between the value of imported goods and exported goods. 

The country has enjoyed annual surpluses dating back to 2014. Prior to that, an intensive power and water development drive swelled imports, leading to a series of trade deficits, including the peak in 2012 at P16.3 billion.

According to Statistics Botswana figures released this week, for 2018, the trade balance was strained by three quarters of deficits, but was helped by the P3.8 billion surplus recorded in the second quarter.

The narrower trade surplus in 2018 was as a result of higher imports, most of these towards diamonds, and machinery and equipment. Under the sales agreement with De Beers, Botswana imports diamonds from De Beers’ mines around the world, processes these in Gaborone and exports them together with local production. As a result, diamonds are recorded as both imports and exports.

Economists generally believe higher machinery and equipment imports, while they may narrow trade surpluses or even lead to deficits, are tolerable as they potentially lead to greater economic output in years to come.