Malawi’s trade deficit triples
Malawi’s trade deficit in the first half (H1) of this year stood at $1.16 billion (about K2 trillion), thrice the 2023’s H1 deficit of $348.8 million (about K610 billion), figures show.
The Reserve Bank of Malawi (RBM) data contained in the June monthly economic review show that imports surged sharply between January and June 2024, with the figures for May and June amounting to $471.3 million (about K825.2 billion), which is more than the 2023 half year total.
The persistent high trade deficit in 2024 is attributed to continued slow growth of exports and the sharp rise of imports, according to the RBM Monthly Economic Review for June 2024
On the other hand, the report shows that export earnings increased to $56 million (about K97.9 billion) in June 2024 from $37.7 million (K65.9 billion) recorded in the previous month. But the earnings were below that of June 2023 recorded at $74.6 million (K131 billion).
The report further said that imports increased to $288.8 million [about K505.8 billion] in June from $276.2 million [about K483.6 billion) in May 2024.
“The outturn was largely attributed to increases in the purchase of fertiliser, cereals and nuclear reactors, boilers and machinery,” reads the report in part.
Speaking in an interview yesterday, Common Market for Eastern and Southern Africa Business Council president James Chimwaza attributed the worsening trade gap to various factors, including the volatile exchange rate and continued lack of production capacity.
He said: “If you compare the Southern African Development Community and other regions, most countries, including Malawi have not registered remarkable strides on improving capacity to produce products that are relevant for competitive exports.
“There is also a continued appetite for what we do not produce, which, coupled with the volatile exchange rate, we often find ourselves with the skyrocketing balance in domestic currency terms.”
The trade gap is being experienced at a time the country is implementing the National Export Strategy (NES II) launched three years ago to boost the share of exports in the gross domestic product (GDP) to 20 percent by 2026.
According to the NES II, Malawi aspires to increase exports of ‘Made in Malawi’ goods and services to the regional and global marketplace; improve export readiness and international competitiveness of the country’s industries, enterprises and products.
Ministry of Trade and Industry Principal Secretary Christina Zakeyo said in an interview yesterday that trade balance issues are affected by many factors outside its trade facilitation role.
She applauded the ministry for successfully reducing the time and costs of doing business for cross-border traders.
“The ministry believes that trade facilitation is a game-changer and a strong contributor to the reduction of trade costs and improved efficiency and hence trade flows,” said Zakeyo.
Through the NES II, Malawi targets markets in neighbouring countries, regional markets, European Union, USA, Russia, the Middle East, Asia and emerging markets such as Canada, Australia and Switzerland.
