Trade balance narrows in 2021

Malawi’s merchandise trade balance improved last year to $982 million (about K797 billion) from $1.94 billion (about K1.57 trillion) in 2020, figures contained in the 2022 Annual Economic Report shows.

The report, an annual publication prepared by the Ministry of Finance and Economic Affairs as part of the budget documents, shows that the narrow trade deficit was due to the 50 percent increase in exports to $1.56 billion (about K1.26 trillion) from $773 million (about K627 billion ) recorded in 2020.

But after launching the National Export Strategy II (NES II)(2021–2026), Ministry of Trade expects an improved trade balance.

Reads the report in part: “The strategy will contribute to Malawi 2063 through income generation and job creation and will help Malawi exploit opportunities that have remained untapped for a long time in the various bilateral, regional, and multilateral trade agreements that we are party to.

“The target is to increase exports as a percentage of the gross domestic product [GDP] from 14.6 percent to 20 percent, which requires Malawi to double its exports to achieve an annual export growth of 5.6 percent.”

According to the report, imports recorded a six percent drop from $2.71 billion (about K2.19 trillion) recorded in 2020 to $2.54 billion (about K2.06 trillion) in 2021.

The increase was mainly attributed to the increase in the country’s traditional exports of tobacco which grew by 20 percent, tea by 27 percent while sugar grew by 37.8 percent when compared to returns from these exports in 2020.

However, Malawi’s export basket continued to be dominated by agricultural products, with tobacco alone constituting about 40 percent of total exports.

Sugar and coffee exports claimed second and third slots, respectively with 10 percent share of total exports.

On the other hand, fuel and fertiliser remained Malawi’s main import products with the available data showing that, as of October 2021, the two products claimed about 26 percent of 2021 total imports, up from 23 percent recorded in 2020.

Ministry of Trade spokesperson Mayeso Msokera is on record as having said that the country’s trade balance has become an issue of concern but the government continues to implement policies and strategies to narrow the trade gap.

He said the main focus is to build the export readiness of Malawian exporters and develop regional and global value chains, promoting entrepreneurship with emphasis on micro, small and medium enterprises and addressing critical enablers related to exports such as energy, transport, market intelligence and trade facilitation.