Malawi’s trade deficit with the rest of the world has worsened to about K60 billion (US$118 110 236), an indication that the country’s imports continue to surpass exports, at least in kwacha terms.
The country’s trade deficit—an excess of imports over exports— in June 2014 worsened by over 30 percent from K44.7 billion in the previous month, according to the National Statistical Office (NSO) quarterly statistical bulletin released on Friday.
This is an indication that Malawi’s export performance weakened during the period. However, on a year-on-year basis, the trade deficit has worsened by about 20 percent from K48.5 billion in June 2013.
According to NSO data, regardless of the worsening trade deficit, the country’s leading import, diesel, did not increase significantly, reaching K7.9 billion while other major imports, including petrol and fertilisers, fell in the period.
This shows that local consumers demanded more imported goods and services in other trade lines.
In terms of outbound goods, the country’s exports were dominated by tobacco at K17.7 billion, groundnuts, macadamia and other nuts at K3.9 billion while tea’s export value stood at K3.3 billion.
Since May 2012, the kwacha has been volatile against the dollar, which may have affected the green buck value of the trade balance. However, between May and June 2014, the kwacha remained relatively stable.
Due to ballooning imports relative to exports, in 2012 government launched the National Export Strategy (NES), which provides a road map for developing Malawi’s productive base to prompt an increase in exports relative to imports.
Ministry of Industry and Trade spokesperson Wiskes Nkombezi could not immediately comment on what government is doing to reverse the trend in view of the five-year NES.
But National Working Group for Trade Policy chairperson Geoff Mkandawire, commenting on Malawi’s trade performance, said local products may not be competitive in terms of quality, standards and pricing and, therefore, consumers resort to importing the goods.
He urged the ministry and Malawi Bureau of Standards (MBS) to work on improving local standards to ensure that they become competitive.
Mkandawire, however, blamed local consumers, arguing that some Malawians have a tendency of buying imported goods regardless of quality, saying the country needs to work on changing the mindset through the Best-Buy-Malawi campaign.