Malawi’s trade account is projected to marginally improve to a deficit of $1.3 billion (K728 billion) this year from $1.4 billion (K784 billion) in 2014, Reserve Bank of Malawi (RBM) has said.
The projected improvement in the trade gap is good news for the country which has been overburdened by a widening gap between imports and exports value, in favour of the former.
Ministry of Industry and Trade spokesperson Wiskes Nkombezi said in an interview on Wednesday there are strong indications that this year the country will export more in terms of value and volumes.
Even then, the $1.3 billion deficit is still one of the highest trade gaps in the world, according to World Bank recent studies on Malawi’s trade performance.
“The improvement [in the trade deficit] is explained by a projected increase in exports of goods to $1.5 billion [K840 billion] from $1.4 billion in the previous year,” reads RBM’s Financial and Economic Review for second quarter [Q2] of 2015.
The central bank’s analysis shows that the manufacturing sector is expected to contribute more to the export buffer, growing by six percent this year due to increased demand for processed tea and sugar following drought experienced in Brazil this year.
In 2016, RBM said the manufacturing sector is poised to grow by 7.1 percent.
But Nkombezi said despite producing less maize this year due to adverse impact of ravaging floods and subsequent drought, the country has produced high volumes of groundnuts and soy beans, among other crops.
“The only problem is the informality of trade in the sense that we are still exporting quite a substantial volume of goods through the informal market,” he said, adding that records show the country is exporting more poultry and related products to Tanzania where there is huge demand.
Nkombezi said in terms of value, the exports are set to increase on account of the weakening of the kwacha against the dollar since June this year, which in essence means that Malawi exports are competitive than is the case when the local currency is strong.
According to Malawi Government Annual Economic Report 2014, the agricultural sector contributes about 80 percent of export earnings, with agricultural exports consisting only a small number of products, particularly tobacco.
Recently, the World Bank, in its fiscal monitoring report, said over the past three decades, the average annual volume of exports from Malawi has grown by only 2.9 percent.