Malawi’s contribution to the total world exports has been sharply declining for last 20 years.
This situation has contributed to a weak export base and a steady loss of foreign exchange reserves, the International Monetary Fund (IMF) has said.
IMF country representative for Malawi Dr Ruby Randall said while Malawi’s overall share of world exports has been declining between 1990 and 2010, the country’s imports as a share of gross domestic product (GDP) has been rising since mid-1990 exceeding Africa’s low-income countries and sub-Saharan average.
Randall unveiled the figures in Mangochi on Friday in her presentation titled ‘On the road to economic recovery, poverty reduction and sustained, diversified growth,’ at the Association of Business Journalists (ABJ) annual conference.
“Several indicators point to a steady erosion in Malawi’s competitiveness overtime. For example, over the past decade, Malawi’s export performance has been consistently weaker than that of other African low- income countries and sub-Saharan Africa as a whole,†said Randall.
She said between 1990 and 1994, Malawi’s share of regional merchandise exports to the world was pegged at 12.8 percent before plummeting to 9.7 percent between 1995 and 1999.
Randall explained that the export share further tumbled between 2000 and 2004 from 7.4 percent before shrinking to five percent between 2005 and 2010.
Such a trend should be a big concern to government as it has contributed to the widening of the country’s trade gap—the difference between imports and export value—which has in recent years significantly contributed to the worsening of foreign exchange scarcity.
Randall singled out countries such as Mozambique, Tanzania, Zambia and Uganda whose share of exports to the world has been fairly increasing over the last decade ending 2010.
She said the surge in the share of imports as a ratio of GDP, on one hand, has resulted in a persistent deterioration of current account deficit of Malawi’s balance of payments (BoP) a situation, she said, has contributed to a steady loss of international reserves and a chronically low import cover.
Randall also pointed out that Malawi’s World Bank Doing Business indicators have recently suggested that the country is at a competitive disadvantage as compared to its neighbouring countries.
The IMF country representative also recalled that prior to the implementation of recent policy reforms, Malawi was clearly on a path that was unsustainable as epitomised by growing pressure on the country’s foreign exchange market.
“Rapid growth of domestic incomes and a broadly fixed exchange rate created an imbalance between the growth of imports and exports, and led to widened current account and balance of payments deficits,†added Randall.
She said the economy was also dogged by a ‘perennially’ low import cover at 1.1 percent which she said was the third lowest in sub-Saharan region.
Randall mentioned that economic outlook before the reforms was bleak adding that without the reforms; the situation would have significantly worsened.
Experts say Malawi has had weak export performance over the past years and argue the country could be economically independent if the gap between exports and imports narrows, among others.
