Trade deficit narrows in 2023 Q4
Malawi’s trade deficit narrowed by 6.2 percent to $495.8 million at the end of the fourth quarter of 2023, figures from the Reserve Bank of Malawi (RBM) show.
Figures from the central bank contained in the December 2023 issue of the Finance and Economic Review show that the trade deficit narrowed from $528.6 million (K898.6 billion under the current exchange rate).
This was also marginally lower than the $532.5 million trade balance recorded at the corresponding period in 2022.
The report reads: “The outcome was attributed to a wider decrease in imports than a decline in exports during the review period.”
Figures contained in the report show that total imports dropped from $869 million in the third quarter to K799.9 million in Q4 while exports dropped from $340.4 million to $304.1 million.
Cumulatively, this means Malawi has closed the year with a $2.17 billion trade deficit (about K3.6 trillion at the current exchange rate).
Reacting to the development, Mzuzu University agricultural economist Christopher Mbukwa said the trade deficits were expected because the country’s major export earners—sugar, tobacco and tea—have not managed to boost the country’s export value vis-à-vis the country’s rising import demand.
He said in a WhatsApp response: “This is expected to pile pressure on the exchange rate and, presumably, forex availability.”
In an earlier interview, Malawi Investment and Trade Centre executive director Paul Kwengwere cautioned that if left unchecked, the perennial deficits could worsen the country’s current account deficits and pile pressure on the kwacha.
He said: “What this means in the short-term is that forex to finance imports will be in short supply but that can somehow be mitigated by borrowing. In the medium to long term, the borrowing will affect the development of the country because of the debt repayment burden.”
He, thus, urged local authorities to pour more resources into trade promotion and facilitation which can catalyse the identification and penetration of new export markets for our export products.”
