Food imports trigger rise in import bill
Increased importation of food items continues to push up the import bill, a situation which is said to have worsened the trade deficit in 2016 as a result of the combined impact of the decrease in exports and increase in imports
In an interview with Business News on Saturday, Catholic University head of economics department Gilbert Kachamba observed that a lot of food imports entering Malawi can be found locally.
“As the economy is recovering and growing at the same time, we should expect the import bill to rise as citizens will be looking to satisfy their consumption needs with foreign manufactured goods.
“With the bumper yield on the staple food, we don’t expect much in terms of food imports but we have to be careful on what we are importing as there are a lot of food substance coming from abroad even when we have them available locally.
“The trade deficit will not change significantly as a huge amount of our exports are agricultural commodities which fetch lower prices as comparedto manufactured products which we import. As a result, trade position will not improve significantly with the bumper harvest,” he said.
Figures from the World Bank indicate that the import bill will rise by an estimated 1.4 percent in 2016. When food imports are excluded, however, the total value of imports declined by 4.8 percent, due to the decl2ine in the value of the import of petroleum products and fertiliser.
According to the bank, although the volume of fuel imported increased by an estimate 12.8 percent, mainly as a result of the increased use of generators to manage persistent power cuts, the fall in the dollar unit price was quite significant, ranging from a drop of 24.5 percent for petrol to 32.6 percent for paraffin.
“The merchandise trade deficit is expected to deteriorate from 11.5 percent of GDP in 2015 to 19.0 percent of GDP in 2016. Without food imports, the import bill is likely to grow only modestly due to a recovery in economic activity, higher fuel prices and increased fuel imports,” said the bank in its May 2017 Malawi Economic Monitor (MEM) titled Harnessing the Urban Economy.
In a separate interview on Saturday, Ministry of Industry, Trade and Tourism spokesperson WiskesNkombezi attributed the rising import bill to last year’s drought which impacted negatively on output, especially in the agricultural sector and those industries that depend on agricultural raw materials.
Official estimates indicate that in 2016, a total of 284 000 metric tons of maize was imported, with the value of these imports standing at almost $127 million, or 5.5 percent of the total value of all imports.
