Malawi trade deficit widens to K48.2 billion

Malawi’s trade deficit widened by about 50 percent to K48.2 billion in June 2013 compared to same period in 2012, an indication that the country’s exports were dwarfed by imports.

Available data provided by the National Statistics Office (NSO) indicate that Malawi’s total imports jumped by about 36 percent to K78 billion while exports trailed rising by about 17 percent to K30 billion in the period.

NSO statistics further indicate that Malawi imported diesel and petro valued at a total K10.2 billion while the country imported K8.9 billion worth of fertilizers. The country on the other hand exported tobacco valued at K11.9 billion, K3.5 billion worth of uranium, K2.7 billion nuts and tea valued at K2.4 billion.

Ministry of Industry and Trade spokesperson Wiskes Nkombezi in an interview on Monday argued that the widening trade deficit is not due to stagnant exports but rising imports.

“Our biggest problem as a country is that we have a big appetite for imported goods which has been responsible for the rising imports. This is why we are implementing the Buy Malawi Campaign which is aimed at encouraging consumption of locally produced goods because in the current trade regime an economy cannot ban imports,” he said.

Commenting on the National Export Strategy (NES) which was launched in 2012, Nkombezi added that the policy will not bear results instantly because it is a five year programme.

He argued that the NES is aimed at putting in place systems that will encourage exports over the period noting that so far the implementation of the strategy is on track.

The NES targets to raise exports as a share of imports from 51.5 per cent in 2010 to 75.7 percent in 2017 and 93.4 per cent in 2022. It prioritises three export-oriented clusters for diversification: oil seeds products, sugar cane and manufacturers and includes support plans to stakeholder efforts in other major existing clusters: tobacco, mining, tea, tourism and services.

The strategy is aimed at providing a clearly prioritised road map for building Malawi’s productive base to generate sufficient exports to match the upward pressure on Malawi’s imports.

The Reserve bank of Malawi (RBM) in its second quarter Financial and Economic Review indicated that in the period under review—April to June—the value of exports were projected to slightly drop while imports decreased considerably thereby reflecting a better trade balance.

According to the RBM report the country’s trade balance is estimated to marginally worsen to $1.1 billion (K495 billion) in 2013 from $1 billion (K450 billion) in 2012. Total value of exports is projected at $1.4 billion (K630 billion) in 2013 slightly higher than $1.3 billion (K585 billion) estimated value for 2012 while import value for 2013 was estimated at $2.5 billion (K1.1 trillion) compared to $2.3 billion (K1 trillion) for 2012.