Trade deficit widens 148% in 1 month—RBM
Malawi’s trade balance has widened by 148.5 percent between April and May this year largely due to weak exports amid rising imports, Reserve Bank of Malawi (RBM) data shows.
The RBM data contained in the May Monthly Economic Review Report published on Friday shows that the trade balance widened to $228.1 million (about K236.5 billion) from a deficit of $33.6 million (about K34.9 billion) recorded in April 2023. This compares to a deficit of $60.7 million (about K52.2 billion) registered in May 2022.
The report indicates that the deficit was a result of a 330.3 percent surge in imports to $286.1 (about K299.06 billion), which outpaced exports at $58.1 million (about K60.7 billion).
Reads the report in part: “The upturn in imports surge was attributed to importation of $76.5 million [about K79.96 billion] fuel, $17.3 million [about K18.08 billion] pharmaceuticals, $11.2 million [about K11.07 billion] vehicles and $5 million [about K5.22 billion] fertilisers.
The data further shows that exports marginally grew to $58.1 million (about K60.73 billion) in May 2023 from $32.9 million (about K34.39 billion) recorded in April 2023. This compares to $46.4 million (about K48.50 billion) for May last year.
The growth in exports, according to the data, was driven by marginal increase in sales of sugar, tobacco, pulses and oil seeds, tea and coffee.
Malawi’s export basket continues to be highly dominated by agricultural products, which accounted for 60 percent of export basket, according to the report.
Illovo Sugar (Malawi) plc managing director Lekani Katandula last week told Business News that low sugarcane production and an increase in the domestic demand for sugar pushed the firm to temporarily suspend sugar exports to ensure adequate sugar availability in the country.
He said the Malawi Stock Exchange-listed sugar manufacturer was affected by the recent cyclone, thereby holding back on sugar exports.
Meanwhile, Minister of Finance and Economic Affairs Sosten Gwengwe admitted that the trade balance remains a challenge, but said government will continue to address issues of export diversification and import substitution.
He said government will strengthen the balance of payment position as well as promoting local manufacturing.
Government is also banking on the National Export Strategy II (2021– 2026), which is anchored on industrial development through manufacturing of value-added products for exports to close the trade balance.
Ministry of Trade and Indsutry spokesperson Mayeso Msokera admitted in an earlier interview that trade balance has become an issue of concern, “but government continues to implement policies and strategies to narrow the trade gap”.
He said the focus is to build the export readiness of Malawi exporters and develop regional and global value chains, promote entrepreneurship with emphasis on micro, small and medium enterprises.
National Working Group on Trade Policy chairperson Frederick Changaya in an earlier interview urged the replacement of traditional exports with high-value added products to penetrate the export market.
