The International Monetary Fund (IMF) has projected the country’s trade balance—the difference between a country’s imports and its exports for a given time period—to narrow to 7.8 percent of the gross domestic product (GDP) this year.
As compared to the previous year, there is a decline of 3.1 percentage points from 10.9 percent on account of reduced exports.
According to the IMF’s regional economic outlook for the sub-Saharan Africa Fiscal Adjustment and Economic Diversification, the country is expected to export goods and services worth 27.5 percent and import goods and services worth 39.5 percent of GDP.
As compared to the previous year, the country exported goods and services worth 29.1 percent and imported goods and services worth 45.7 percent.
However, this is above the region’s average of 22.9 percent and 26.8 percent of GDP, respectively.
This year, Malawi produced more than 30 percent surplus in maize owing to good climatic conditions after two successive years of low output due to drought and floods.
Disappointingly, the country’s main export commodity, tobacco underperformed.
Malawi earned $276 million from 195 million kilogrammes (kg) of tobacco compared to this year’s $212 million from 106 million kg of tobacco.
In its May 2017 Malawi Economic Monitor, World Bank senior country economist Richard Record predicted that tobacco exports are expected to decline due to a fall in tobacco production in 2017.
However, he predicted overall export earnings to improve modestly due to the rebound in the agricultural sector following favorable rains and a slight increase in international commodity prices.
“In 2017, although an overall decline in tobacco production is expected, the decline in exports is projected to be less pronounced. Tobacco exports are projected to decline by around 27.6 percent, while overall production is projected to decline by 36 percent.
“Although prices are expected to improve due to the undersupply and to the increase in international prices, the fall in the volume of exports is expected to more than balance the impact of this, thus leading to an overall decrease in the value of tobacco exported,” he said.
Malawi’s trade balance has been widening over the years despite various policy interventions to narrow the trade deficit.
Commenting on the narrowing trade balance recently, Ministry of Industry, Trade and Tourism spokesperson Wiskes Nkombezi, expressed optimism on increasing export and reducing imports owing to the good economic outlook this year.
“We expect that food imports will go down and exports will pick up. However, the ministry will continue working on facilitating growth of non-food products as well as to improve our trade balance,” he said.
Agricultural products continue to dominate Malawi’s export basket, accounting for about 80 percent of Malawi’s exports. n