Malawi’s cumulative trade deficit for the 10 months to October this year has jumped by 16 percent to $2.2 billion (about K3.8 trillion) compared to the same period last year, straining the country’s external position.
Reserve Bank of Malawi (RBM) latest figures show that the October merchandise trade gap widened to $228.7 million (about K400.6 billion) compared to $190 million (K333.0 billion) in the previous month.
The sharp deterioration means that by the end of October, the country’s trade gap had expanded to $2.2 billion (K3.8 trillion) from $1.9 billion (about K3.3 trillion) recorded during the same period in 2024, with annual deficit at $2.3 billion (K4 trillion).
The RBM report indicated that the deficit in October was largely driven by a 36.5 percent rise in exports at $137.3 million (about K240 billion), which offset the 3.5 percent rise of imports to $315.9 million (K553.2 billion) in October from $327.3 million (about K573.2 billion) in September 2025.
Reads the report: “The deficit was primarily due to the weak sales of tobacco and sugar, which were recorded at $55.5 million (about K92.7 billion) and $4.3 million (about K7.5 billion), respectively.”
The report, however, said sales of pulses and groundnuts rose to $1.3 million (about K2.3 billion) and $900 000 (K1.5 billion) respectively, from $700 000 (K1.3 billion) and $300 000 (K523 million) in the previous month.
Despite the widening trade gap, Malawi’s foreign exchange reserve position slightly improved in October.
Total reserves rose to $526.8 million, equivalent to 2.1 months of import cover, from $511.8 million or 2.0 months of import cover in September.
Economists, however, caution that the improvement is fragile.
“The increase in reserves is welcome, but it does not reflect an underlying recovery in export performance,” said Scotland-based Malawian economist Velli Nyirongo.
He said as long as the trade balance remains weak, Malawi’s external vulnerability will persist.”
Nyirongo said rebuilding resilience requires coordinated reforms across fiscal, trade and monetary policy.
“Export diversification, stronger value addition and efficient repatriation of export proceeds are essential,” he said.
In an interview, Export Development Fund (EDF) managing director Frederick Chanza said the core weakness is not merely weak export receipts, but Malawi’s chronic failure to produce at scale.
He said: “We will remain trapped if we keep exporting raw commodities and importing expensive finished products.
“If we are going to restructure our trade and narrow the deficit, we must build scale. That is why we are financing industrial parks, mining projects and high-value processing.”
Mzuzu University economics lecturer Christopher Mbukwa said the rise in the deficit reflects both structural and transactional weaknesses in the economy.
He said: “The reason for the increased trade deficit is the drop in sales of tobacco, groundnuts and tea.
“The rise in this deficit can be attributed to transactions that were done in kwacha this year as opposed to the traditional dollar transactions over the years.”
Last year, Malawi imported goods worth $3 billion (about K5.2 trillion) against exports at $1 billion (K1.7 trillion), creating a $2 billion (K3.5 trillion) deficit, according to National Statistical Office data.
