Malawi’s imports continued to grow although at a low rate, with figures from the World Bank indicating a strong growth of imports of vehicles and fertilisers.
Recently published World Bank figures indicate that in 2017, vehicles and fertilisers grew by 28 percent and 26 percent, respectively.
Petrol imports, on the other hand, increased by nine percent to 181 million litres, up from 166 million litres in 2016 while diesel imports also increased from 190 million litres in 2016 to 223 million litres in 2017.
In 2018, the bank said it expects the current account deficit to narrow slightly to 10.9 percent of gross domestic product (GDP) from 11.3 percent in 2017.
The bank’s country economist Priscilla Kandoole said: “Current account financing is reliant on grants and concessional financing. However, it is assumed that this will remain subdued in the near term. Tobacco in particular is expected to generate increased earnings this season.
“Secondly, the import bill is likely to remain subdued due to weak economic activity, as in previous years.
“The commencement of infrastructure projects is also likely to result in a significant escalation of machinery imports. Therefore, going forward, narrowing the deficit assumes the improved performance of agricultural exports and a decline in food imports,” Historically, imports have weighed heavily on Malawi’s trade balance, with imports dominated by petroleum products.”
Malawi aspires to narrow her trade balance in the next five years by 0.5 percentage points to two percent of GDP in 2022, from 2.5 percent in 2018, according to Malawi Growth and Development Strategy (MGDS) III.
During the same period, exports of goods and services are expected to decline from 28.3 percent of GDP in 2018 to 27.2 percent of GDP in 2022 while imports of goods and services are expected to decline to 36.9 percent of GDP in 2022 from 41.4 percent in 2018.
However, government admits that although both exports and imports are projected to decline during the review period, the economy would still be importing more than it exports, with the trade balance in 2022 projected to stand at 9.7 percent of GDP.
In an earlier interview, Chancellor College economics professor Ben Kaluwa argued that it will be a difficult task to narrow the trade balance if Malawi does not think outside the box.
Ministry of Industry, Trade and Tourism spokesperson Wiskes Nkombezi expressed optimism on narrowing the trade balance.
Malawi is an agro- based economy, as such, agricultural products continue to dominate the export basket, accounting for almost 80 percent.